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Do Employment Protection Reforms Affect Well-Being?

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  • Dräger, Vanessa

    (University of Cologne)

Abstract

This paper examines reforms in German employment protection for permanent workers (EPLP) on workers' well-being proxied by life satisfaction. Using variation in how the reforms affected firms of different sizes, I apply a difference-in-differences approach in conjunction with individual fixed effects. I find that life satisfaction of temporary workers decreases by around 0.5 (11-point scale) when EPLP decreases. I investigate effect heterogeneity and discuss mechanisms. Placebo tests are conducted. An increase in EPLP had no effect. Due to the design of the EPLP reforms, the majority of permanent workers did not face major changes in EPLP.

Suggested Citation

  • Dräger, Vanessa, 2015. "Do Employment Protection Reforms Affect Well-Being?," IZA Discussion Papers 9114, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp9114
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    More about this item

    Keywords

    life satisfaction; well-being; employment protection reforms; quasi-experiment; difference-in-difference;
    All these keywords.

    JEL classification:

    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy

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