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Firing Costs, Employment Fluctuations and Average Employment: An Examination of Germany

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Hunt, Jennifer

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Abstract

West Germany's Employment Promotion Act of 1985 facilitated the use of fixed-term contracts and increased the number of dismissals above which the employer is required to establish a "social plan" (involving severance payments). I assess the effect of this reduction in "firing costs" on movements in employment, using monthly data on a panel of detailed manufacturing industries for 1977-92. I also examine the effect of introducing flexible hours of work in certain industries beginning in 1985. I find that employment adjustment was unaffected by the lower firing costs, but slowed by the greater working hours flexibility. Copyright 2000 by The London School of Economics and Political Science

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Article provided by London School of Economics and Political Science in its journal Economica.

Volume (Year): 67 (2000)
Issue (Month): 266 (May)
Pages: 177-202
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Handle: RePEc:bla:econom:v:67:y:2000:i:266:p:177-202

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  1. Adriana Kugler & Giovanni Pica, 2003. "Effects of Employment Protection and Product Market Regulations on the Italian Labor Market," Economics Working Papers 722, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
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  2. Grund, Christian, 2003. "Severance Payments for Dismissed Employees in Germany," IZA Discussion Papers 875, Institute for the Study of Labor (IZA). [Downloadable!]
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  3. Boockmann, Bernhard & Hagen, Tobias, 2001. "The use of flexible working contracts in West Germany : evidence from an establishment panel," ZEW Discussion Papers 01-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
  4. Hernanz, Virginia & Jimeno, Juan Francisco & Kugler, Adriana D., 2003. "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labour Market Reforms," CEPR Discussion Papers 3724, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Bauer, Thomas K. & Bender, Stefan & Bonin, Holger, 2004. "Dismissal protection and worker flows in small establishments," IAB Discussion Paper 200401, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]. [Downloadable!]
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  6. José Varejão & Pedro Portugal, 2003. "Why Do Firms Use Fixed-Term Contracts?," CETE Discussion Papers 0310, Universidade do Porto, Faculdade de Economia do Porto. [Downloadable!]
  7. Christian Grund, 2004. "Severance Payments for Dismissed Employees Severance Payments for Dismissed Employees in Germany," Bonn Econ Discussion Papers bgse4_2004, University of Bonn, Germany. [Downloadable!]
  8. Ben J. Heijdra & Jenny E. Ligthart, 2001. "Deposit-Refund on Labor: A Solution to Equilibrium Unemployment?," IMF Staff Papers, Palgrave Macmillan Journals, vol. 48(3), pages 8. [Downloadable!] (restricted)
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  9. Kugler, Adriana D. & Pica, Giovanni, 2005. "Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform," CEPR Discussion Papers 5256, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  10. Giuseppe Russo & David Veredas, 2000. "Institutional Rigidities and Employment on the Italian Labour Market: the Dynamic of the Employment in the Large Industrial Firms," CELPE Discussion Papers 53, CELPE (Centre of Labour Economics and Economic Policy), University of Salerno, Italy. [Downloadable!]
  11. Adriana Kugler adkugler@uh.edu & Giovanni Pica, 2005. "The Effects of Employment Protection on the Italian Labour Market," CSEF Working Papers 135, Centre for Studies in Economics and Finance (CSEF), University of Salerno, Italy. [Downloadable!]
  12. Kugler, Adriana & Pica, Giovanni, 2003. "The Effects Of Employment Protection and Product Market Regulations on The Italian Labor Market," Discussion Paper Series In Economics And Econometrics 0310, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
    Other versions:
  13. Marloes de Graaf-Zijl, 2005. "The Attractiveness of Temporary Employment to Reduce Adjustment Costs," Tinbergen Institute Discussion Papers 05-121/3, Tinbergen Institute. [Downloadable!]
  14. Mohamed Ali Ben Halima, 2005. "The determinants for labour contract length A French micro-econometric study," Working Papers 0503, Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure. [Downloadable!]
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