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The Effects of Employmet Protection on Labor Turnover: Empirical Empirical Evidence from Taiwan

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Abstract

This paper investigates the effects of employment protection legislation on the rates of hiring, separation, worker flows, job reallocation, and churning flows for the case of Taiwan. Our empirical identification takes advantage of a reform created by Taiwan’s enactment of Labor Standards Law, which has substantially increased the costs of firing, and the implementation of the law’s enforcement measures. Moreover, our identification also exploits the fact that the stringency of the law’s provisions and the intensity of the law’s enforcement vary with establishment size. Based on monthly data at the establishment level for the period 1983–1995, we find that Taiwan’s Labor Standards Law and its enforcement measures have dampened labor turnover for mediumsized and large establishments, while that of small establishments was not affected.

Suggested Citation

  • Kamhon Kan & Yen-Ling Lin, 2009. "The Effects of Employmet Protection on Labor Turnover: Empirical Empirical Evidence from Taiwan," IEAS Working Paper : academic research 09-A005, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  • Handle: RePEc:sin:wpaper:09-a005
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    File URL: http://www.econ.sinica.edu.tw/upload/file/09-A005(all).2009051217070561.pdf
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    Keywords

    Employment protection; Hiring; Separation; Worker flows; Job reallocation; Churning flows; Labor Standards Law;

    JEL classification:

    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J88 - Labor and Demographic Economics - - Labor Standards - - - Public Policy

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