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Schwellenwerte im deutschen Kündigungsschutzrecht - Ein Beschäftigungshindernis für kleine Unternehmen?

  • Derik Burgert

    ()

    (LEUPHANA University Lüneburg,Department of Economic, Behaviour and Law Sciences, Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)))

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    One of the proposals most frequently raised to increase flexibility of the German labour market is the liberalization of the job protection law. It applies only to those firms employing a more than a cut-off number of employees. Thus, firms just above the cut-off face considerably higher adjustment costs in times of lower demand for labour than their competitors with a firm size lower than this number. An argument produced in the discussion is that this step in legal regulation hinders small firms from growing beyond this cut-off number. The basis for estimating the treatment effect of empoyment protection is a change in the cut-off number in the year 1996. By that time the cut-off number was raised to ten employees releaving small firms between five and ten full-time workers from coverage by the law. The evaluation approach is a Regression Discontinuity Design using the change in legislation as a natural experiment. The local treatment effect can then be estimated non-parametrically. The method used is a local linear regression. The data base used is the 1997 wave of the IAB establishment panel containing some 8 000 firm level observations. The paper is one of the few using micro data to evaluate effects of job protections measures. To my knowledge it is the first one to exploit the policy change named above and controlling for self-selection into the treatment job protection.

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    File URL: http://www.leuphana.de/fileadmin/user_upload/Forschungseinrichtungen/ffb/files/publikationen/diskussion/DP_51_schwellenwerte_kuendigungsrecht.pdf
    File Function: First version, 2005
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    Paper provided by Research Institute on Professions (Forschungsinstitut Freie Berufe (FFB)), LEUPHANA University Lüneburg in its series FFB-Discussionpaper with number 51.

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    Length: 27 pages
    Date of creation: Oct 2005
    Date of revision:
    Handle: RePEc:leu:wpaper:51
    Contact details of provider: Web page: http://ffb.uni-lueneburg.de/repec/leu/

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    1. Garibaldi, Pietro & Pacelli, Lia & Borgarello, Andrea, 2003. "Employment Protection Legislation and the Size of Firms," IZA Discussion Papers 787, Institute for the Study of Labor (IZA).
    2. Bauer, Thomas K. & Bender, Stefan & Bonin, Holger, 2004. "Dismissal protection and worker flows in small establishments," IAB Discussion Paper 200401, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    3. Erich Battistin & Enrico Rettore, 2003. "Another look at the regression discontinuity design," CeMMAP working papers CWP01/03, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    4. Buddelmeyer, Hielke & Skoufias, Emmanuel, 2003. "An Evaluation of the Performance of Regression Discontinuity Design on PROGRESA," IZA Discussion Papers 827, Institute for the Study of Labor (IZA).
    5. Verick, Sher, 2004. "Threshold Effects of Dismissal Protection Legislation in Germany," IZA Discussion Papers 991, Institute for the Study of Labor (IZA).
    6. 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.
    7. John T. Addison & Paulino Teixeira, 2003. "The Economics of Employment Protection," Journal of Labor Research, Transaction Publishers, vol. 24(1), pages 85-129, January.
    8. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
    9. Hahn, Jinyong & Todd, Petra & Van der Klaauw, Wilbert, 2001. "Identification and Estimation of Treatment Effects with a Regression-Discontinuity Design," Econometrica, Econometric Society, vol. 69(1), pages 201-09, January.
    10. Carling, Kenneth & Larsson, Laura, 2002. "Does early intervention help the unemployed youth?," Working Paper Series 2002:10, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    11. Wagner, Joachim & Schnabel, Claus & Kölling, Arnd, 2001. "Threshold Values in German Labor Law and Job Dynamics in Small Firms: The Case of the Disability Law," IZA Discussion Papers 386, Institute for the Study of Labor (IZA).
    12. Jinyong Hahn & Petra Todd & Wilbert Van der Klaauw, 1999. "Evaluating the Effect of an Antidiscrimination Law Using a Regression-Discontinuity Design," NBER Working Papers 7131, National Bureau of Economic Research, Inc.
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