ABSTRACT
There may be no labor market institution more controversial than employment protection regulation – the set of laws and procedures regulating separations between firms and workers.
• Firms complain not only about the direct cost, but also about the complexity and the uncertainty introduced by such regulation. They argue that it makes it difficult for them to adjust to changes in technology and product demand, and that this in turn decreases efficiency, increases cost and, in so doing, deters job creation.
