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Employment protection legislation, labor courts, and effective firing costs

Author

Listed:
  • Jimeno Juan F.
  • Mora-Sanguinetti Juan S.

    (Banco de España, Universidad de Alcalá, Madrid, Spain)

  • Martínez-Matute Marta

    (Universidad Autónoma de MadridMadridSpain)

Abstract

In many countries, labor courts play a central role in the determination of firing costs by monitoring and supervising the procedures for dismissals, and, eventually, deciding severance payments mandated by the employment protection legislation (EPL). To get some insights about the impact of labor courts on effective firing costs, we explore a new database that contains information on labor courts’ intervention in firings before and after the implementation of significant EPL reforms modifying severance payments and procedures for dismissals. Our results suggest that labor court rulings on economic dismissals did not fully translate the reduction of firing costs mandated by the new EPL to effective firing costs.

Suggested Citation

  • Jimeno Juan F. & Mora-Sanguinetti Juan S. & Martínez-Matute Marta, 2020. "Employment protection legislation, labor courts, and effective firing costs," IZA Journal of Labor Economics, Sciendo & Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 9(1), pages 1-26, January.
  • Handle: RePEc:vrs:izajle:v:9:y:2020:i:1:p:26:n:3
    DOI: 10.2478/izajole-2020-0002
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    Cited by:

    1. Eichhorst, Werner & Marx, Paul, 2019. "How Stable Is Labour Market Dualism? Reforms of Employment Protection in Nine European Countries," IZA Discussion Papers 12309, Institute of Labor Economics (IZA).
    2. Camille Signoretto & Julie Valentin, 2019. "Individual dismissals for personal and economic reasons in French firms: One or two models?," European Journal of Law and Economics, Springer, vol. 48(2), pages 241-265, October.
    3. Bentolila, Samuel & Dolado, Juan J. & Jimeno, Juan F., 2019. "Dual Labour Markets Revisited," IZA Discussion Papers 12126, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    employment protection legislation; firing costs; unemployment; labor courts;
    All these keywords.

    JEL classification:

    • J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
    • J53 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Labor-Management Relations; Industrial Jurisprudence
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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