Threshold Effects of Dismissal Protection Legislation in Germany
In this paper we use a reform in the applicability of the Protection Against Dismissal Act or Kündigungsschutzgesetz in Germany to identify employment effects of the legislation for small establishments. Using a panel of establishments for the period 1997-2001, we find some evidence that a tightening of the threshold resulted in a higher probability of persistence and a lower probability of growth for the units in the treatment group during the post-reform years. When using the establishment size as according to the legislation, the effects were the strongest for establishments which were further away from the threshold. This result could reflect the presence of other institutional barriers or adjustment costs than those imposed by the Act. Alternatively, small establishments are unlikely to have perfect information regarding the applicability of the legislation. This is somewhat supported by the results when taking all employees as the measure for the establishment size. However, there is also some evidence that these results are being driven by other factors than the reform of the legislation.
|Date of creation:||Jan 2004|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 228 3894 223
Fax: +49 228 3894 180
Web page: http://www.iza.org
|Order Information:|| Postal: IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany|
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Giuseppe Bertola, 1991.
"Labor Turnover Costs and Average Labor Demand,"
NBER Working Papers
3866, National Bureau of Economic Research, Inc.
- Katherine G. Abraham & Susan N. Houseman, 1993.
"Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France and Belgium,"
Upjohn Working Papers and Journal Articles
93-16, W.E. Upjohn Institute for Employment Research.
- Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," Book chapters authored by Upjohn Institute researchers, in: Rebecca M. Blank (ed.), Social Protection Versus Economic Flexibility: Is There a Trade-off?, pages 59-93 W.E. Upjohn Institute for Employment Research.
- Katharine G. Abraham & Susan N. Houseman, 1994. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Chapters, in: Social Protection versus Economic Flexibility: Is There a Trade-Off?, pages 59-94 National Bureau of Economic Research, Inc.
- Katharine G. Abraham & Susan N. Houseman, 1993. "Does Employment Protection Inhibit Labor Market Flexibility? Lessons from Germany, France, and Belgium," NBER Working Papers 4390, National Bureau of Economic Research, Inc.
- Boockmann, Bernhard & Hagen, Tobias, 2001. "The use of flexible working contracts in West Germany: evidence from an establishment panel," ZEW Discussion Papers 01-33, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Addison, John T. & Teixeira, Paulino, 2001.
"The Economics of Employment Protection,"
IZA Discussion Papers
381, Institute for the Study of Labor (IZA).
When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp991. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mark Fallak)
If references are entirely missing, you can add them using this form.