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How does employment protection legislation influence hiring and firing decisions by the smallest firms?

  • Millán, Ana
  • Millán, José María
  • Román, Concepción
  • van Stel, André

This paper examines the impact of employment protection legislation (EPL) on hiring decisions by own-account workers and firing decisions by very small firms (one to four employees). Using data from the EU-15 countries, our results show that the strictness of employment protection legislation is negatively related to both these types of decisions, and hence, to labour mobility among the smallest firms. This new evidence may be useful for governments aiming to create a more enabling macro-environment for employment and productivity growth.

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File URL: http://www.sciencedirect.com/science/article/pii/S016517651300428X
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Article provided by Elsevier in its journal Economics Letters.

Volume (Year): 121 (2013)
Issue (Month): 3 ()
Pages: 444-448

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Handle: RePEc:eee:ecolet:v:121:y:2013:i:3:p:444-448
Contact details of provider: Web page: http://www.elsevier.com/locate/ecolet

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  1. Román, Concepción & Congregado, Emilio & Millán, José María, 2013. "Start-up incentives: Entrepreneurship policy or active labour market programme?," Journal of Business Venturing, Elsevier, vol. 28(1), pages 151-175.
  2. Breschi, Stefano & Lissoni, Francesco, 2000. "Knowledge Spillovers And Local Innovation Systems: A Critical Survey," ERSA conference papers ersa00p362, European Regional Science Association.
  3. C. Praag & Peter Versloot, 2007. "What is the value of entrepreneurship? A review of recent research," Small Business Economics, Springer, vol. 29(4), pages 351-382, December.
  4. Carroll, Robert, et al, 2000. "Income Taxes and Entrepreneurs' Use of Labor," Journal of Labor Economics, University of Chicago Press, vol. 18(2), pages 324-51, April.
  5. Audretsch, David B. & Keilbach, Max C. & Lehmann, Erik E., 2006. "Entrepreneurship and Economic Growth," OUP Catalogue, Oxford University Press, number 9780195183511.
  6. Martin Carree & Roy Thurik, 2006. "The Lag Structure of the Impact of Business Ownership on Eco-nomic Performance in OECD Countries," Papers on Entrepreneurship, Growth and Public Policy 2006-02, Max Planck Institute of Economics, Entrepreneurship, Growth and Public Policy Group.
  7. van Stel, A.J. & Storey, D. & Thurik, A.R., 2006. "The Effect of Business Regulations on Nascent and Young Business Entrepreneurship," ERIM Report Series Research in Management ERS-2006-052-ORG, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  8. Westhead, Paul & Cowling, Marc, 1995. " Employment Change in Independent Owner-Managed High-Technology Firms in Great Britain," Small Business Economics, Springer, vol. 7(2), pages 111-40, April.
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  10. Thurik, A. Roy & Carree, Martin A. & van Stel, André & Audretsch, David B., 2008. "Does self-employment reduce unemployment?," Journal of Business Venturing, Elsevier, vol. 23(6), pages 673-686, November.
  11. David Grubb & Agnès Puymoyen, 2008. "Long time series for public expenditure on labour market programmes," OECD Social, Employment and Migration Working Papers 73, OECD Publishing.
  12. Andrew E. Burke & Felix R. FitzRoy & Michael A. Nolan, 2000. "Self-Employment Wealth and Job Creation: The Roles of Gender, Non-Pecuniary Motivation and Entrepreneurial Ability," CRIEFF Discussion Papers 0006, Centre for Research into Industry, Enterprise, Finance and the Firm.
  13. Concepción Román & Emilio Congregado & José Millán, 2011. "Dependent self-employment as a way to evade employment protection legislation," Small Business Economics, Springer, vol. 37(3), pages 363-392, October.
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  15. Cooper, David P., 2001. "Innovation and reciprocal externalities: information transmission via job mobility," Journal of Economic Behavior & Organization, Elsevier, vol. 45(4), pages 403-425, August.
  16. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2000. " When Less Is More: Distinguishing between Entrepreneurial Choice and Performance," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 62(5), pages 565-87, December.
  17. José Millán & Emilio Congregado & Concepción Román, 2012. "Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 231-258, February.
  18. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
  19. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
  20. Millán, José María & Congregado, Emilio & Román, Concepción, 2014. "Persistence in entrepreneurship and its implications for the European entrepreneurial promotion policy," Journal of Policy Modeling, Elsevier, vol. 36(1), pages 83-106.
  21. Robert Carroll & Douglas Holtz-Eakin & Mark Rider & Harvey Rosen, 1996. "Income Taxes and Entrepreneur' Use of Labor," Working Papers 752, Princeton University, Department of Economics, Industrial Relations Section..
  22. Andrew Henley, 2005. "Job Creation by the Self-employed: The Roles of Entrepreneurial and Financial Capital," Small Business Economics, Springer, vol. 25(2), pages 175-196, 09.
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  24. Marc Cowling & Mark Taylor & Peter Mitchell, 2004. "Job Creators," Manchester School, University of Manchester, vol. 72(5), pages 601-617, 09.
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  26. Andrew Burke & Felix Fitzroy & Michael Nolan, 2009. "Is there a North-South Divide in Self-employment in England?," Regional Studies, Taylor & Francis Journals, vol. 43(4), pages 529-544.
  27. Michael Fritsch, 2008. "How does new business formation affect regional development? Introduction to the special issue," Small Business Economics, Springer, vol. 30(1), pages 1-14, January.
  28. Assar Lindbeck & Dennis J. Snower, 2001. "Insiders versus Outsiders," Journal of Economic Perspectives, American Economic Association, vol. 15(1), pages 165-188, Winter.
  29. repec:cup:cbooks:9780521728355 is not listed on IDEAS
  30. José Millán & Emilio Congregado & Concepción Román, 2012. "Erratum to: Determinants of self-employment survival in Europe," Small Business Economics, Springer, vol. 38(2), pages 259-263, February.
  31. Paula E. Stephan, 1996. "The Economics of Science," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1199-1235, September.
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