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

  • André van Stel
  • José Maria Millán
  • Concepcion Roman
  • Ana Millán

This paper examines the impact of employment protection legislation (EPL) on hiring decisions by own-account workers and firing decisions by very small firms (1-4 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.entrepreneurship-sme.eu/pdf-ez/H201216.pdf
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Paper provided by EIM Business and Policy Research in its series Scales Research Reports with number H201216.

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Length: 14 pages
Date of creation: 13 Mar 2013
Date of revision:
Handle: RePEc:eim:papers:h201216
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  1. Franco Peracchi, 2002. "The European Community Household Panel: A review," Empirical Economics, Springer, vol. 27(1), pages 63-90.
  2. Audretsch, David B. & Keilbach, Max C. & Lehmann, Erik E., 2006. "Entrepreneurship and Economic Growth," OUP Catalogue, Oxford University Press, number 9780195183511, March.
  3. Aparna Mathur, 2010. "Health insurance and job creation by the self-employed," Small Business Economics, Springer, vol. 35(3), pages 299-317, October.
  4. 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.
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  6. 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.
  7. André van Stel & Roy Thurik & David Storey, 2006. "The effect of business regulations on nascent and young business entrepreneurship," Scales Research Reports H200609, EIM Business and Policy Research.
  8. 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.
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  13. 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.
  14. Breschi, Stefano & Lissoni, Francesco, 2000. "Knowledge Spillovers And Local Innovation Systems: A Critical Survey," ERSA conference papers ersa00p362, European Regional Science Association.
  15. 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.
  16. Burke, Andrew E & FitzRoy, Felix R & Nolan, Michael A, 2002. " Self-Employment Wealth and Job Creation: The Roles of Gender, Non-pecuniary Motivation and Entrepreneurial Ability," Small Business Economics, Springer, vol. 19(3), pages 255-70, November.
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  18. repec:cup:cbooks:9780521728355 is not listed on IDEAS
  19. 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.
  20. André van Stel & Roy Thurik & David Audretsch & Martin Carree, 2007. "Does Self-Employment Reduce Unemployment?," Scales Research Reports H200709, EIM Business and Policy Research.
  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..
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  25. M.A. Carree & A.R. Thurik, 2008. "The Lag Structure of the Impact of Business Ownership on Economic Performance in OECD Countries," Small Business Economics, Springer, vol. 30(1), pages 101-110, January.
  26. 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.
  27. repec:dgr:uvatin:2007066 is not listed on IDEAS
  28. 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.
  29. 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.
  30. 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.
  31. 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.
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