We provide empirical evidence that strong dismissal laws appear to have a positive effect on the innovative pursuits of firms and their employees. Stringent labor laws provide firms a commitment device to not punish short-run failures and thereby spur their employees to pursue value-enhancing...

This paper investigates under which conditions firms use fixed-term contracts, subcontracted and freelance work. Using a probit model which accounts for unobserved heterogeneity, we find that positive changes in expected or actual turnover are associated with a higher probability of employing...

In this paper we use a reform in the applicability of the Protection Against Dismissal Act or Kuendigungsschutzgesetz in Germany to identify employment effects of the legislation for small establishments. Using a panel of establishments for the period 1997-2001, we find some evidence that a...

This paper tests whether the job security offered by stricter employment protection legislation (EPL) undermines positive compensating wage differentials that would otherwise be paid. Specifically, we ask whether industries with relatively more need for layoffs and labour flexibility have lower...

This paper examines the impact of employment protection legislation on productivity in the OECD, using annual cross-country aggregate data on the degree of regulations and industry-level data on productivity from 1982 to 2003. We adopt a "difference-in-differences" framework, which exploits...

In 2004, a section was added to the German Protection against Dismissal Act, establishing a new procedure to dismiss an employee, given a predetermined severance payment. Most legal scholars presume the change to be without impact, while a minority of experts claims it to be either beneficial or...