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Effects of Dismissal Protection Legislation on Individual Employment Stability in Germany

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Author Info
Bernhard Boockmann ()
Daniel Gutknecht ()
Susanne Steffes ()

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Abstract

Changes in Dismissal Protection Legislation in Germany have been a subject to ongoing research in the past decade. The majority of these studies, however, has not been able to determine significant effects on job and worker flows in firms affected by the reforms. We estimate the impact of dismissal protection on individual employment stability using the 1999 reform as a "natural experiment".We provide insights into the effects of legislation on the firms’ matching behaviour. Our results hint at increased job security after the reform for those spells affected by it. This rise in stability was, however, accompanied by modest instability at start suggesting that firms facing additional firing costs tend to cease probation to shed unproductive job-worker matches. The latter effect, however, was not found to be significant.

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File URL: http://www.iaw.edu/RePEc/iaw/pdf/iaw_dp_45.pdf
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Publisher Info
Paper provided by Institut für Angewandte Wirtschaftsforschung (IAW) in its series IAW Discussion Papers with number 45.

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Length: 30 pages
Date of creation: Oct 2008
Date of revision:
Handle: RePEc:iaw:iawdip:45

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Related research
Keywords: J32; J65; C41;

Find related papers by JEL classification:
J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Private Pensions
J65 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Unemployment Insurance; Severance Pay; Plant Closings
C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Boeri, Tito, 1996. "Is Job Turnover Countercyclical?," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 603-25, October. [Downloadable!] (restricted)
  2. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June. [Downloadable!] (restricted)
  3. Boockmann, Bernhard & Hagen, Tobias, 2005. "Fixed-term Contracts as Sorting Mechanisms: Evidence From Job Durations in West Germany," ZEW Discussion Papers 05-85, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  4. Thomas K. Bauer & Stefan Bender & Holger Bonin, 2007. "Dismissal Protection and Worker Flows in Small Establishments," Economica, London School of Economics and Political Science, vol. 74(296), pages 804-821, November. [Downloadable!] (restricted)
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  5. Roberto Torrini & Fabiano Schivardi, 2004. "Threshold effects and firm size: The case of firing costs," 2004 Meeting Papers 445, Society for Economic Dynamics. [Downloadable!]
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  6. 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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  7. Alberto Abadie, 2005. "Semiparametric Difference-in-Differences Estimators," Review of Economic Studies, Blackwell Publishing, vol. 72(1), pages 1-19, 01. [Downloadable!] (restricted)
  8. Fernando Alvarez & Marcelo Veracierto, 1999. "Labor market policies in an equilibrium search model," Working Paper Series WP-99-10, Federal Reserve Bank of Chicago. [Downloadable!]
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  9. Boeri, Tito & Jimeno, Juan F., 2005. "The effects of employment protection: Learning from variable enforcement," European Economic Review, Elsevier, vol. 49(8), pages 2057-2077, November. [Downloadable!] (restricted)
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  10. Ammermüller, Andreas & Zwick, Thomas & Boockmann, Bernhard & Maier, Michael, 2007. "Do hiring subsidies reduce unemployment among the elderly? Evidence from two natural experiments," ZEW Discussion Papers 07-001, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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