Employment protection and productivity: evidence from firm-level panel data in Japan
AbstractRecent developments in the literature on Employment Protection Legislation (EPL) have revealed that changing the stringency of employment protection can lead to extensive consequences outside the labour market, by affecting firms’ production decisions or workers’ commitment levels. This article provides the first empirical evaluation of the comprehensive effect of restrictions on firing employees in Japan, by exploiting the variations in court decisions. We find that judgements lenient to workers significantly reduce firms’ total-factor productivity growth rate. The effect on capital is mixed and inconclusive, although we obtain modest evidence that an increase in firing costs induces a negative scale effect on capital inputs.
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Bibliographic InfoArticle provided by Taylor & Francis Journals in its journal Applied Economics.
Volume (Year): 45 (2013)
Issue (Month): 15 (May)
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Other versions of this item:
- OKUDAIRA Hiroko & TAKIZAWA Miho & TSURU Kotaro, 2011. "Employment Protection and Productivity: Evidence from firm-level panel data in Japan," Discussion papers 11078, Research Institute of Economy, Trade and Industry (RIETI).
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