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Labor regulations and European venture capital

  • Bozkaya, Ant



  • Kerr, William R.


    (Harvard University, Bank of Finland, and NBER)

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 market insurance mechanisms. Venture capital investors are especially sensitive to these labor adjustment costs. Nations favoring labor market expenditures as the mechanism for providing worker insurance developed stronger venture capital markets over 1990-2008, especially in high volatility sectors. In this context, policy mechanisms are more important than the overall level of worker insurance.

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Paper provided by Bank of Finland in its series Research Discussion Papers with number 30/2013.

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Length: 50 pages
Date of creation: 11 Dec 2013
Date of revision:
Publication status: Published as Bozkaya, Ant and William R. Kerr, 'Labor regulations and European venture capital' in Journal of Economics and Management Strategy, 2014, pages 776-810.
Handle: RePEc:hhs:bofrdp:2013_030
Contact details of provider: Postal: Bank of Finland, P.O. Box 160, FI-00101 Helsinki, Finland
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