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In this paper we show, theoretically and empirically, that stronger employment protection legislation (EPL) in a host country has important and differing effects on the various activities of multinational enterprises (MNEs). Using micro data on affiliates to Swedish multinational firms in 20...

This paper considers a small open economy where an input-output industrial structure, scale economies and imperfect competition, create vertical linkages and multiple equilibria. In this environment, an imperfect labor market is introduced by assuming unionized labor. It is shown that if the...

We analyze the consequences for sickness absence of a selective softening of job security legislation for small firms in Sweden in 2001. According to our differences-in-difference estimates, aggregate absence in these firms fell by 0.2-0.3 days per year. This aggregate net figure hides important...

This paper considers a small open economy with an input-output industrial structure that creates vertical linkages and multiple equilibria. An imperfect labor market is introduced by assuming unionized labor. It is shown that a deregulation of the labor market may trigger a large discontinuous...

This article surveys the literature and adds to the evidence on the impact of employment protection legislation on employment. While stringent employment protection contributes to less turnover and job reallocation, the effects on aggregate employment and unemployment over the business cycle are...

We use the 1952 Swedish municipal amalgamation reform to study free-riding and the common pool problem in politics. We expect municipalities that were affected by the reform to increase their debt in anticipation of a merger, and this effect to be larger if they were merged with many other...

The theoretical predictions of how employment protection affects firm productivity are ambiguous. In this paper I study the effect of employment protection rules on labor productivity using micro data on Swedish firms. A reform of the employment protection rules in 2001 made it possible for...

Differential enforcement of employment protection by explicit design of the legislation, for example through exemptions for small firms, has been exploited in a growing body of research. However, little is known about the effects of differential enforcement that is not defined by the letter of...

An exemption in the Swedish Employment Security Act (LAS) in 2001 made it possible for employers with a maximum of ten employees to exempt two workers from the seniority rule at times of redundancies. Using this within-country enforcement variation, the relationship between employment protection...