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Labor regulations and European venture capital

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  • Bozkaya, Ant

    ()
    (MIT)

  • Kerr, William R.

    ()
    (Harvard University, Bank of Finland, and NBER)

Abstract

European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor market insurance mechanisms. Venture capital investors are especially sensitive to these labor adjustment costs. Nations favoring labor market expenditures as the mechanism for providing worker insurance developed stronger venture capital markets over 1990-2008, especially in high volatility sectors. In this context, policy mechanisms are more important than the overall level of worker insurance.

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Bibliographic Info

Paper provided by Bank of Finland in its series Research Discussion Papers with number 30/2013.

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Length: 50 pages
Date of creation: 11 Dec 2013
Date of revision:
Handle: RePEc:hhs:bofrdp:2013_030

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Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
Web page: http://www.suomenpankki.fi/en/
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Keywords: employment protection regulations; dismissal costs; unemployment insurance benefits; private equity; venture capital; entrepreneurship;

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Cited by:
  1. Cumming, Douglas & Li, Dan, 2013. "Public policy, entrepreneurship, and venture capital in the United States," Journal of Corporate Finance, Elsevier, vol. 23(C), pages 345-367.
  2. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.

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