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Labor Regulations and European Private Equity

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  • ANT Bozkaya
  • William R. Kerr

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 insurance mechanisms. Venture capital and private equity investors are especially sensitive to these labor adjustment costs. Nations favoring labor expenditures as the mechanism for providing worker insurance developed stronger private equity markets in high volatility sectors over 1990-2004. These patterns are further evident in US investments into Europe. In this context, policy mechanisms are more important than the overall insurance level provided.

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Bibliographic Info

Paper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 09-055.RS.

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Length: 37 p.
Date of creation: 2009
Date of revision:
Publication status: Published by:
Handle: RePEc:sol:wpaper:09-055

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Keywords: employment protection regulations; dismissal costs; unemployment insurance benefits; private equity; venture capital; buy-outs; entrepreneurship.;

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Citations

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Cited by:
  1. William Kerr & Ramana Nanda, 2009. "Financing Constraints and Entrepreneurship," NBER Working Papers 15498, National Bureau of Economic Research, Inc.
  2. Edward L. Glaeser & William R. Kerr, 2008. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Harvard Business School Working Papers 09-055, Harvard Business School.
  3. Ghani, Ejaz & Kerr, William R. & O'Connell, Stephen D., 2012. "What makes cities more competitive ? spatial determinants of entrepreneurship in India," Policy Research Working Paper Series 6198, The World Bank.
  4. Marco Da Rin & Thomas F. Hellmann & Manju Puri, 2011. "A survey of venture capital research," NBER Working Papers 17523, National Bureau of Economic Research, Inc.
  5. Lerner, Josh & Tåg, Joacim, 2013. "Institutions and Venture Capital," Working Papers 2012:17, Swedish Entrepreneurship Forum.
  6. Ejaz Ghani & William R. Kerr & Stephen D. O'Connell, 2011. "Spatial Determinants of Entrepreneurship in India," NBER Working Papers 17514, National Bureau of Economic Research, Inc.
  7. Crowley, Patrick & Garcia, Enrique & Quah , Chee-Heong, 2013. "Is Europe growing together or growing apart?," Research Discussion Papers 33/2013, Bank of Finland.

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