Employment protection and firm-level job reallocation : adjusting for coverage / Benedicta Marzinotto, Ladislav Wintr
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Employment protection and firm-level job reallocation
Discovery
1684951119
URN
urn:nbn:de:gbv:3:2-115323
DOI
ISBN
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Publication history
Halle (Saale), Germany : Halle Institute for Economic Research (IWH), Member of the Leibniz Association, [04. December 2019]
Content
1 Online-Ressource (III, 48 Seiten, 0,59 MB) : Diagramme
Edition
Language
eng
Comment
Abstract
This paper finds that employment protection legislation (EPL) had a significant impact on employment adjustment in Europe over 2001-2013, once we account for firm-size related exemptions to EPL. We construct a novel coverage-adjusted EPL indicator and find that EPL hinders employment growth at the firm level and increases the share of firms that remain in the same size class. This suggests that stricter EPL restrains job creation because firms fear the costs of shedding jobs during downturns. We do not find evidence that EPL has positive effects on employment by limiting job losses after adverse shocks. In addition to standard controls for the share of credit-constrained firms and the position in the business cycle, we also control for sizerelated corporate tax exemptions and find that these also significantly constrain job creation among incumbent firms.
Series
IWH-CompNet discussion papers ; 2019, no. 5 (December 2019) ppn:887996302