IESET.
Hypotheses·labour·labour_market_flexibility_employment_growth_panel

In a broad-country panel 1990-2019, greater labour-market flexibility — measured by lower OECD EPL overall strictness, higher ease-of-hiring scores, and absence of centralized wage bargaining — predicts higher employment-to- population ratios and faster real GDP per capita growth, controlling for institutional quality, education, and trade openness.

The directional claim is that a one-standard-deviation increase in flexibility predicts at least 1 percentage-point higher employment-to-population and 0.3 percentage points higher annual growth.

PARTIALengine/runs/labour_market_flexibility_employment_growth_panel

PARTIAL — coef=-1.251, p=0.162 (above α=0.1); direction inconclusive

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

When countries open more of the economy to trade and competition, do people end up with better long-run income or productivity outcomes?

plain answer

The evidence is suggestive but not decisive. coef=-1.251, p=0.162 (above α=0.1); direction inconclusive

why it matters

Labor-market rules often help some workers while risking job loss or slower hiring for others. This test looks for that tradeoff in observable employment or unemployment data.

how the test works

It compares 38 country or place units from 1990 to 2019, using a panel fe design, with fixed effects for country and year.

what was measured
What changed
  • Employment protection rules overall strictness
  • Labour freedom index
What we checked
  • Employment to population ratio
  • Real income per capita growth
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

0 input datasets, 0 unresolved missing series, provenance status: no input vintages recorded.

Results

engine/runs/labour_market_flexibility_employment_growth_panel
1007550250199020052019USAGBRDEUFRAITAESPNLD
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show employment_to_population_ratio across 38 sampled countries over 1990–2019.
The shapes above are stylised — none of the lines are real data.
Placeholder for labour_market_flexibility_employment_growth_panel. Published chart will be generated from engine/runs/labour_market_flexibility_employment_growth_panel/chart_data.json.

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:53:38Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

In a broad-country panel 1990-2019, greater labour-market flexibility — measured by lower OECD EPL overall strictness, higher ease-of-hiring scores, and absence of centralized wage bargaining — predicts higher employment-to- population ratios and faster real GDP per capita growth, controlling for institutional quality, education, and trade openness. The directional claim is that a one-standard-deviation increase in flexibility predicts at least 1 percentage-point higher employment-to-population and 0.3 percentage points higher annual growth.

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

SUPPORTED if β1 (flexibility) is positive and significant at p<0.10 for both employment and GDP growth. PARTIAL if positive and significant for employment but not growth. REFUTED if β1 is negative and significant at p<0.10. INFORMATIVE: excluding USA and UK should not eliminate the positive sign; if it does, the result is driven by Anglo-Saxon outliers.

formal test & threshold
test:      panel_fe_labour_flexibility_employment_growth
threshold: β_flexibility (employment/pop) > 0 at p<=0.10  AND β_flexibility (GDP growth) > 0 at p<=0.10  AND Ex-USA-UK robustness retains positive sign.

Method

Template
panel_fe
Fixed effects
country, year
Clustering
country
Sample
38 countries · 1990 – 2019
Evidence type
associational

Two-way FE panel: employment = β0 + β1*flexibility + controls + FE. Robustness: (1) exclude USA and UK (dominant flexible cases); (2) use 5-year non-overlapping averages; (3) instrument flexibility with lagged left-party government seat share; (4) separate permanent vs temporary worker EPL; (5) subsample by income level.

Data

VariableSourceTransform
employment_to_population_ratio
outcome
ilostat:EMP_2EMP_SEX_AGE_RT_Atier 2
level
real_gdp_per_capita_growth
outcome
world_bank_wdi:NY.GDP.PCAP.KD.ZGtier 2
level
epl_overall_strictness
treatment
oecd:EPL_OVtier 2
inverted_scale
labour_freedom_index
treatment
heritage_ief:labor_freedomtier 4
level
log_gdp_per_capita
control
world_bank_wdi:NY.GDP.PCAP.KDtier 2
log
human_capital_index
control
pwt:hctier 3
level
institutional_quality
control
wgi:RL.ESTtier 4
level
trade_openness
control
world_bank_wdi:NE.TRD.GNFS.ZStier 2
level
working_age_population_share
control
world_bank_wdi:SP.POP.1564.TO.ZStier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — labour_market_flexibility_employment_growth_panel

Verdict: PARTIAL — coef=-1.251, p=0.162 (above α=0.1); direction inconclusive

Pre-registration

  • Claim: In a broad-country panel 1990-2019, greater labour-market flexibility — measured by lower OECD EPL overall strictness, higher ease-of-hiring scores, and absence of centralized wage bargaining — predicts higher employment-to- population ratios and faster real GDP per capita growth, controlling for institutional quality, education, and trade openness. The directional claim is that a one-standard-deviation increase in flexibility predicts at least 1 percentage-point higher employment-to-population and 0.3 percentage points higher annual growth.
  • Falsification rule: SUPPORTED if β1 (flexibility) is positive and significant at p<0.10 for both employment and GDP growth. PARTIAL if positive and significant for employment but not growth. REFUTED if β1 is negative and significant at p<0.10. INFORMATIVE: excluding USA and UK should not eliminate the positive sign; if it does, the result is driven by Anglo-Saxon outliers.
  • Falsification test: panel_fe_labour_flexibility_employment_growth

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): -1.251
  • Std error: 0.8931
  • p-value: 0.162
  • Observations: 375, countries: 19
  • Within R²: 0.32
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • ilostat:EMP_2EMP_SEX_AGE_RT_A → employment_to_population_ratio (outcome, publisher=world_bank_wdi, n=8071)
  • world_bank_wdi:NY.GDP.PCAP.KD.ZG → real_gdp_per_capita_growth (outcome, publisher=world_bank_wdi, n=13897)
  • oecd:EPL_OV → epl_overall_strictness (treatment, publisher=oecd, n=1123)
  • heritage_efw:labor_freedom → labour_freedom_index (treatment, publisher=heritage_ief, n=533)
  • world_bank_wdi:NY.GDP.PCAP.KD → log_gdp_per_capita (controls, publisher=world_bank_wdi, n=12104)
  • pwt:hc → human_capital_index (controls, publisher=pwt, n=8637)
  • wgi:RL.EST → institutional_quality (controls, publisher=wgi, n=5296)
  • world_bank_wdi:NE.TRD.GNFS.ZS → trade_openness (controls, publisher=world_bank_wdi, n=10714)
  • world_bank_wdi:SP.POP.1564.TO.ZS → working_age_population_share (controls, publisher=world_bank_wdi, n=16965)

Generated by scripts/run_panel_fe.py at 2026-06-29T17:53:38+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Authored framework. Read the transparency note.