Does Labour Law Increase Youth and Total Unemployment? Analysis of a New Dataset for 31 Countries

Using longitudinal data on labour law for 31 countries over the period 1991–2012, the present study estimates the impact of labour regulation on unemployment. The dynamic panel data analysis distinguishes between the short-run and long-run effects of regulatory change. It is observed that worker-protective labour laws in general have no unfavourable effect on both total and youth unemployment. Laws specifically relating to alternative employment contracts, working time and employee representation are found to have beneficial effects on unemployment.