Job security, employment and wages

Abstract Job security provisions are often cited as a major factor in the high unemployment in European economies. This paper finds that such provisions do not bias labor demand toward lower average employment at given wages, nor do they bias wage determination toward higher wages. In the countries considered, medium and long run employment appears unrelated to the extent of job security legislation. In high job security countries, wages tend to be lower and more sensitive to outside unemployment. Job security provisions alone cannot be blamed for the high unemployment in European countries.