Title: Effects of obligatory compensation from previous experience on unemployment

Authors: Papadimitriou Pyrros; Smagadi Theodora

Addresses: Department of Political Science and International Relations, University of Peloponnese, Dervenakion 47 & Adimandou, Corinth 22100, Greece ' Department of Political Science and International Relations, University of Peloponnese, Dervenakion 47 & Adimandou, Corinth 22100, Greece

Abstract: The purpose of this paper is to investigate the effects on unemployment from the legal obligation in Greece to compensate employees for their previous experience, measured by the years of employment in a similar job. If mandatory wage compensation according to this 'typical' experience leads to wages higher than the equilibrium, then the existence of this obligation is likely to be associated with higher rates of unemployment. The analysis of wage data from a sample of 1673 employees and the responses from 2370 unemployed people showed that increases in wages that are not combined with increased productivity can create distortions in the labour market which often result in layoffs and unemployment.

Keywords: unemployment; employee experience; wage gap; minimum wage; legal obligation; Greece; employee compensation; law; wages increase; productivity.

DOI: 10.1504/IJTGM.2012.049988

International Journal of Trade and Global Markets, 2012 Vol.5 No.3/4, pp.254 - 267

Received: 08 May 2021
Accepted: 12 May 2021

Published online: 21 Oct 2012 *

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