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The Effects of Employment Protection on the Choice of Risky Projects

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Author Info

  • Glazer, A.
  • Kanniainen, V.

Abstract

We consider a firm that is subject to employment protection laws that limit the firm's ability to fire labor. In particular, we suppose that though a firm which shuts down can fire all its workers, it may fire no fewer. Compared to a firm that is subject to no employment protection, a firm constrained in firing will prefer a risk-free project over a risky one, but may prefer the riskier of two risky projects.

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Bibliographic Info

Paper provided by Department of Economics in its series University of Helsinki, Department of Economics with number 487.

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Length: 15 pages
Date of creation: 2000
Date of revision:
Handle: RePEc:fth:helsec:487

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Postal: University of Helsinki; Department of Economics, P.O.Box 54 (Unioninkatu 37) FIN-00014 Helsingin Yliopisto
Phone: +358 9 191 8897
Fax: +358 9 191 8877
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Web page: http://www.helsinki.fi/politiikkajatalous/
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Related research

Keywords: LABOUR ; PROTECTIONISM ; RISK;

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References

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  1. Glazer, A. & Kanniainen, V., 2000. "Term Length and the Quality of Appointments," University of Helsinki, Department of Economics 485, Department of Economics.
  2. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "A Model of Labour Demand with Linear Adjustment Costs," CEPR Discussion Papers 690, C.E.P.R. Discussion Papers.
  3. Rothschild, Michael & Stiglitz, Joseph E., 1970. "Increasing risk: I. A definition," Journal of Economic Theory, Elsevier, vol. 2(3), pages 225-243, September.
  4. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
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Citations

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Cited by:
  1. Sebastian G. Kessing, 2006. "Employment Protection and Product Market Competition," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 339-352, 07.
  2. Lukach, R. & Plasmans, J.E.J., 2002. "Measuring Knowledge Spillovers using Patent Citations: Evidence from the Belgian Firm's Data," Open Access publications from Tilburg University urn:nbn:nl:ui:12-92281, Tilburg University.
  3. Raquel Fonseca & Natalia Utrero, 2006. "Employment Protection Laws, Barriers to Entrepreneurship, Financial Markets and Firm Size," Working Papers 454, RAND Corporation Publications Department.

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