Schwellenwerte im deutschen Kündigungsschutzrecht - Ein Beschäftigungshindernis für kleine Unternehmen?
AbstractOne of the proposals most frequently raised to increase flexibility of the German labour market is the liberalization of the job protection law. It applies only to those firms employing a more than a cut-off number of employees. Thus, firms just above the cut-off face considerably higher adjustment costs in times of lower demand for labour than their competitors with a firm size lower than this number. An argument produced in the discussion is that this step in legal regulation hinders small firms from growing beyond this cut-off number. The basis for estimating the treatment effect of empoyment protection is a change in the cut-off number in the year 1996. By that time the cut-off number was raised to ten employees releaving small firms between five and ten full-time workers from coverage by the law. The evaluation approach is a Regression Discontinuity Design using the change in legislation as a natural experiment. The local treatment effect can then be estimated non-parametrically. The method used is a local linear regression. The data base used is the 1997 wave of the IAB establishment panel containing some 8 000 firm level observations. The paper is one of the few using micro data to evaluate effects of job protections measures. To my knowledge it is the first one to exploit the policy change named above and controlling for self-selection into the treatment job protection.
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Bibliographic InfoPaper provided by Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg in its series FFB-Discussionpaper with number 51.
Length: 27 pages
Date of creation: Oct 2005
Date of revision:
Income; employment protection; threshold effects; RDD; local linear regression; Germany;
Find related papers by JEL classification:
- J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
- K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
- M51 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - Firm Employment Decisions; Promotions
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