Why Won’t Workers Do Their Jobs? Labor Market Rigidity and Job Performance in the Public Sector

We test the link between labor market rigidities and job performance in the public sector using a novel outcome variable namely, the number of days that it takes to the postal service to return letters sent to non-existent foreign addresses, a measure that we argue is an excellent proxy for job performance. We find a positive and statistically significant link between these two variables, regardless of the labor rigidity measure employed, changes in specification, and even unlikely endogeneity considerations, which suggest that this finding may be causal.