Exam question help: Comparison of the degree of employment protection legislation in the US and the UK?

I'm doing an exam paper with the following problem statement:





"Compare and contrast the degree and nature of employment protection legislation in the US and the UK, and explain possible reasons for the differences or similarities found".





So far I've established that the UK has more employment protection legislation than the US, but both have comparably low employment protection legislation compared to OECD averages.





Does anyone have any suggestions for reasons for the differences and similarities found? It could be anything: economic reason, political reasons, trade union history, cultural values, or anything else I haven't thought of.





Any thoughts would be appreciated :)|||One of the most consistent findings in the literature on employment protection legislation (EPL) has to do with the legal traditions of the country. Both the US and UK are common law systems, and as such are much more likely to have lower levels of EPL than countries with civil law legal traditions (see Botero et. al.).





You are off to a good start with the OECD data. Venn's update to the data certainly improved the accuracy of the indicators; however, be aware that the difference in the level of EPL as coded by the OECD may not accurately portray the qualitative difference between EPL in the two countries.





There are several alternative explanations of the variation in EPL arrangements which may be of use to you in this exam, I would point you to the works below for a good survey of the current explanations for variance in EPL. In your position, I would classify the explanations according to culture (religion, civic attitudes), competition for international economic activity (Race to the Bottom and Diffusion hypotheses), and economic arguments (those based on individual actors and their preferences, eg Saint Paul ). By comparing the changes in EPL over time between the two countries, you have the opportunity to assess the explanatory power of these explanations and perhaps propose some alternative ones, such as the role of trade unions.





If you have the time and can get access to it, the Stone book may be of particular use to you since it is focused on the US.





Algan, Y. and Cahuc, P. (2006a). Civic attitudes and the design of labor market


institutions: Which countries can implement the Danish Flexicurity Model?


IZA Discussion Papers 1928, Institute for the Study of Labor (IZA).





Algan, Y. and Cahuc, P. (2006b). Job protection: the macho hypothesis. Oxford


Review of Economic Policy, 22(3):390-410.





Boeri, T., Conde-Ruiz, J. I., and Galasso, V. (2003). Protecting against labour


market risk: Employment protection or unemployment bene ts? Working


Papers 2003-17, FEDEA.





Botero, J. C., Djankov, S., Porta, R. L., de Silanes, F. L., and Shliefer, A. (2004).


The regulation of labor. The Quarterly Journal of Economics, 119(4):1339-


1382.





Brugemann, B. (2007). Employment protection: Tough to scrap or tough to get?


The Economic Journal, 117:F386-F415.





D'Orlando, F. and Ferrante, F. (2009). The demand for job protection: Some clues


from behavioural economics. Journal of Socio-Economics, 38(1):104-114.





Ferrante, F. (2004). Employment protection legislation and redistribution. Working


paper series, University of Cassino - Faculty of Economics - Department of


Economics (DIPSE).





Kucera, D. (2002). Core labour standards and foreign direct investment. Inter-


national Labour Review, 141(1-2):31{69.





Lazaer, E. P. (1990). Job security provisions and employment. The Quarterly


Journal of Economics, 105(3):699-726.





MacLeod, W. B. and Nakavachara, V. (2007). Wrongful discharge law enhance


employment. The Economic Journal, 117:F218-F278.





Mosley, L. and Uno, S. (2007). Racing to the bottom or climbing to the top?: Economic


globalization and collective labor rights. Comparative Political Studies,


40(8):923{948.





Saint-Paul, G. (1996). Exploring the political economiy of labour market institutions.


Economic Policy, 11(23):265-315.





Saint-Paul, G. (2002). The political economy of employment protection. Journal


of Political Economy, 110(3):672-701.





Simmons, B. and Elkins, Z. (2004). The globalization of liberalization: Policy


di usion in the international political economy. American Political Science


Review, 98(1):171-189.





Stone, K. V. W. (2004). From Widgets to Digits: Employment Regulation for the


Changing Workplace. Cambridge University Press.





Venn, D. (2009). Legislation, collective bargaining and enforcement: Updating the


OECD employment protection indicators. Technical report, Organisation for


Economic Co-Operation and Development. www.oecd.org/els/workingpapers.|||In the US, there is a strong philosophy of "at will employment" which means that employers can terminate employees for any reason at any time, unless there are circumstances which make the employee a protected class. (Such as you cant fire a women for getting pregnant, or you cant fire someone someone because of their race or religion).


While that seems like most of the power is in the hand of the employer, consider that the US does not have much of any apprentice system, so an employer can invest lots of money into training someone, who leaves the business whenever they wish, having being trained for free. So it kind of goes both ways.