The degree of employment protection affects employment flows as well as work effort of employees. Whereas the former … aspect has been analysed in many studies, the impact of employment protection on work effort has been analysed in few recent … studies. Theory predicts that employment protection reduces work effort because employee shirking cannot be that easily …

using data from the German Socio-Economic Panel (SOEP) for the years 1992 to 2013. Additionally, the East-West gap and its … due to differences in household income and unemployment status. The conditional East-West gap decreased in the first years …