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Fixed-term contracts and dismissal protection. Evidence from a policy reform in Germany

Author

Listed:
  • Lutz Bellmann

    (University of Erlangen-Nuremberg)

  • Hans-Dieter Gerner

    (Institute of Employment Research, Nuremberg)

  • Christian Hohendanner

    (Institute of Employment Research, Nuremberg, University of Erlangen-Nuremberg)

Abstract

In our paper, we analyze the impact of German employment protection legislation on the firms’ employment adjustment patterns. We explore a reform of the Protection Against Dismissal Act (PADA) in 2004 that decreased the employment protection in small establishments and thus generated a quasi-experiment. Extending previous studies we distinguish between open-ended and fixed-term contracts, as the latter might be used to circumvent the PADA. Difference-in-differences estimations based on IAB Establishment Panel data show no overall effect of the reform on firms’ employment adjustment patterns. However, the proportion of hirings based on fixed-term contracts decreases.

Suggested Citation

  • Lutz Bellmann & Hans-Dieter Gerner & Christian Hohendanner, 2014. "Fixed-term contracts and dismissal protection. Evidence from a policy reform in Germany," Working Paper Series in Economics 320, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:320
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    References listed on IDEAS

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    8. Centeno, Mário & Novo, Álvaro A., 2012. "Excess worker turnover and fixed-term contracts: Causal evidence in a two-tier system," Labour Economics, Elsevier, vol. 19(3), pages 320-328.
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    Cited by:

    1. Kai Priesack, 2015. "Employment consequences of changes in dismissal protection: Evidence from a 2004 German reform," BDPEMS Working Papers 2015012, Berlin School of Economics.

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