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Dismissal Protection and Worker Flows in Small Establishments

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  • Bauer, Thomas
  • Bender, Stefan
  • Bonin, Holger

Abstract

Based on a large employer-employee matched dataset, the Paper investigates the effects of variable enforcement of German dismissal protection legislation on the employment dynamics in small establishments. Specifically, using a difference-in-differences approach, we study the effect of changes in the threshold scale exempting small establishments from dismissal protection provisions on worker flows. In contrast to the predictions of the theory, our results indicate that there are no statistically significant effects of the dismissal protection legislation on worker turnover.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 4379.

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Date of creation: May 2004
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Handle: RePEc:cpr:ceprdp:4379

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Keywords: difference-in-differences; employment protection; linked-employer-employee dataset;

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