The Only Way is Up? Employment Protection and Job Mobility among Recent Entrants to European Labour Markets

The paper addresses the effects of employment protection legislation on job mobility and status attainment among young people entering the labour market. Given that strict employment protection legislation (EPL) has often been shown to reduce the dynamics of labour markets in general, resulting low vacancy levels might also reduce youth chances of both job and upward status mobility, and thus flatten observed status-experience profiles. Data from the European Labour Force Survey 2000 Adhoc-module on Transitions from School to Work for 11 European countries supports these assertions: empirically, both job and status mobility rates are negatively related to strict employment protection legislation. The total effect of employment protection on school-to-work transitions is more indeterminate, however, given that EPL also affects the structure of youth labour markets. The empirical analyses show a positive effect of employment protection legislation on occupational attainment of market entrants in both entrants’ first jobs and by about five years since leaving the educational system. Empirically, these positive EPL effects on the structure of labour markets dominate negative EPL effects on upward mobility chances – i.e. job shopping typically does not compensate for a good start into working life. The respective EPL effects are shown to affect the low-skill labour market in particular.