Employment protection could also segment the labor market to increase the group of more vulnerable workers that circulate between temporary jobs and unemployment. This group of workers is typically represented by young people, women, and people with lower education and work experience.
The theoretical predictions on the effect of employment protection are ambiguous and more empirical research is therefore needed to increase the understanding of employment protection and its implications.
A field that is relatively unexplored is that of implicit contracts of employment protection. Recent findings indicate that family firms might be able to uphold implicit contracts in which they insure their workers against the risks associated with economic cycles, and in return they are willing to work for less pay. The project investigates the occurrence and consequences of implicit contracts of employment protection in family firms. The project also investigates the effect of legislated employment protection on productivity, worker effort, capital deepening, and labor market segmentation.