Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/339014 
Year of Publication: 
2025
Series/Report no.: 
Working Paper No. 2025:22
Publisher: 
Institute for Evaluation of Labour Market and Education Policy (IFAU), Uppsala
Abstract: 
To estimate the causal effect of employment protection on firms' worker selection, we study apolicychangethatreduced dismissalcosts fortheemployersof overatenth of Sweden's workforce. Our difference-in-differences analysis of firms' hiring uses individual ability mea-sures including estimated worker fixed effects, GPA at age 15, and military test scores. We find that the reform reduced minimum hire quality by around 2%. Our results show that firms both decrease their hiring thresholds and hire more workers. We find that firms increas-ingly hire young, foreign born and long-term non-employed individuals, suggesting potential welfare gains of the reform.
Subjects: 
worker selection
screening
hiring standard
employment protection
dismissal costs
JEL: 
M51
D22
J24
J38
Document Type: 
Working Paper

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