Labor market reforms in the direction of “flexicurity” have been widely endorsed as a means to increase an economy's ability to adjust to negative shocks while offering adequate social safety nets. This paper empirically examines how such reforms influence employment's responsiveness to...

This paper examines how employment protection legislation affects location decisions of multinationals. Based on a simple theoretical framework, we estimate an empirical model, using OECD-data on bilateral FDI-flows and employment protection indices. We find that, while an ?unfavourable?...

This paper reconsiders the link between welfare state provision, globalisation and competitiveness empirically. We challenge the conventional wisdom that welfare states, large-scale public provision of social insurance and progressive systems of redistributive taxation are incompatible with...

[Conclusion] Taken together, the analysis in this paper does not support the conventional wisdom that the welfare state hinders country competitiveness, or that social expenditure (financed through corporate taxation) deters inward foreign direct investment. Instead, we find that welfare...

High inter-country variability characterises the responsiveness of both output to (exogenous) shocks and employment to output contractions. We argue that intercountry differences in firm-size distributions contribute to explaining this variability. Within an open economy model, we show that...