Planning and Budgeting

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Evaluating the effect of logal regulations with the use of economic analyses is regarded as one of the most important grounds of positive analyses applications of the Law and Economic Approach. This paper evaluates one of the crucial issues mentioned in the 2nd chapter of Labor Law i.e. labor agreement cancellation through firing workers. Economic analysis of legal regulations is normally started by Coase Theorem but considering the presence of different interpretations on the basis of this theorem it is impossible to offer a viewpoint on the efficiency of the Labor Low regulations. Considering the obscurity of theoretical patterns, the size and directions of job security in employment should be empirically expressed. Calculating the Job Security (JS) indicator, which particularly focuses on labor fire expenditures, shows that after the ratification of the present Labor Law, this indicator has approximately doubled in comparison to the previous law (1958). Estimating the effect of the mentioned regulations on populations, various subgroups through a probit model specification indicates that the establishment of job security regulations in the present method is against the young age group employment and the employment of the low-skill group.

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