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Does protection against dismissal increase the employment threshold?

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  • Gebhard Flaig
  • Horst Rottmann

Abstract

Labour market institutions are important determinants for the performance of labour markets and for explaining the differences among international unemployment rates. The Ifo Institute, together with Prof. Horst Rottmann, Amberg-Weiden University of Applied Science, examined the effects of dismissal protection laws on the employment threshold (the growth rate of output that must be reached for employment to rise). A comparison of 17 OECD countries showed that stronger job protection increases the employment threshold significantly. In the 1990s the employment threshold in Germany was 2.4%. If British dismissal protection laws had prevailed, a growth rate of 1.2% would have sufficed to increase employment.

Suggested Citation

  • Gebhard Flaig & Horst Rottmann, 2004. "Does protection against dismissal increase the employment threshold?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 57(17), pages 13-17, September.
    • Handle: RePEc:ces:ifosdt:v:57:y:2004:i:17:p:13-17
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    References listed on IDEAS

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    1. Gebhardt Flaig & Horst Rottmann, 2001. "Input Demand and the Short‐ and Long‐Run Employment Thresholds: An Empirical Analysis for the German Manufacturing Sector," German Economic Review, Verein für Socialpolitik, vol. 2(4), pages 367-384, November.
    2. Stephen Nickell, 2003. "Labour Market Institutions and Unemployment in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(02), pages 13-26, October.
    3. Nickell, Stephen & Layard, Richard, 1999. "Labor market institutions and economic performance," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 46, pages 3029-3084, Elsevier.
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    5. Gomez-Salvador, Ramon & Messina, Julian & Vallanti, Giovanna, 2004. "Gross job flows and institutions in Europe," Labour Economics, Elsevier, vol. 11(4), pages 469-485, August.
    6. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages 1-33, March.
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    8. Lawrence Kahn, 2003. "Labour Market Institutions and Unemployment in OECD Countries," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 1(4), pages 25-32, October.
    9. repec:ces:ifodic:v:1:y:2003:i:2:p:14567946 is not listed on IDEAS
    10. Julián Messina, 2005. "Institutions and Service Employment: A Panel Study for OECD Countries," LABOUR, CEIS, vol. 19(2), pages 343-372, June.
    11. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 105(3), pages 699-726.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    2. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    3. Gebhard Flaig & Horst Rottmann, 2005. "Labour Market Institutions and Employment Thresholds. An International Comparison," ifo Working Paper Series No.15, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
    4. Beate Schirwitz, 2005. "Wirtschaftswachstum und Beschäftigung : die Beschäftigungsschwelle (Wachstum und Beschäftigung)," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(03), pages .34-37, June.
    5. Jahn, Elke J., 2005. "Wie wirkt der Kündigungsschutz? (What are the effects of employment protection?)," Zeitschrift für ArbeitsmarktForschung - Journal for Labour Market Research, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany], vol. 38(2/3), pages 284-304.
    6. Beate Schirwitz, 2005. "Wirtschaftswachstum und Beschäftigung : die Beschäftigungsschwelle (Wachstum und Beschäftigung)," ifo Dresden berichtet, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 12(03), pages 34-37, 06.

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    More about this item

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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