Stricter employment protection and firms’ incentives to train: The case of French older workers
From French data, this paper uses a diﬀerence-in-diﬀerences approach combined with propensity score matching to identify the eﬀect of an exogenous change in employment protection among older workers on ﬁrm's incentives to provide training. Laying oﬀ workers aged 50 and above, French ﬁrms have to pay a tax to the unemployment insurance system, known as the Delalande tax. In 1999, the measure was subjected to a reform that increased due taxes but that did not concern equally all ﬁrms. We ﬁnd that this exogenous shock to employment protection for older workers substantially rises ﬁrms' incentives to train the 45-49 age group of workers. This result conﬁrms predictions of the simple labor market model we develop in a ﬁrst stage.
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