Economists have killed lots of electrons trying to muster evidence that employment protection laws (laws limiting employers' ability to fire workers without cause) increase the unemployment rate. They have largely failed. Some countries with strong employment protection rules do have high unemployment rates. However some countries, like Austria and the Netherlands have strong employment protection laws and very low unemployment rates. So, when the NYT tells us that analysts want Spain's government to make it easier to fire workers as a way to spur economic growth and employment, it is giving us the position of business within Spain, not the consensus within the economics profession on the issue.
--Dean Baker
