Severance pay is a vital part of employment protection legislation (EPL). We investigate the incidence and level of severance pay for dismissed employees. Our theoretical model predicts that not only the law and its interpretation by labour courts but also the costs of a suit have an impact....

This paper extends Hopenhayn and Rogerson's analysis of firing taxes by introducing a flexible form of capital and considering transitionary dynamics. The paper finds that capital is not important for understanding the long run and welfare effects of firing taxes. However, capital is crucial for...

Many countries have legislation which makes it costly for firms to dismiss or retrench workers. In the case of India, the Industrial Disputes Act, 1947, requires firms that employ 100 or more workers to seek prior permission from government before retrenching workers. This paper builds a...

Courts are an important element in the institutional framework of labor markets, often determining the actual degree of employment protection. German labor courts provide a vivid example in this regard. However, we know relatively little about actual court behavior. A unique data set on German...

Different models of protection against labor market risks are associated with diverging models of economic performance. Historically established institutional complementarities between labor market regulation, unemployment protection, and vocational training tend to mirror specific national...