Dismissal Protection and Worker Flows in Small Establishments

18 Pages Posted: 22 Oct 2007

See all articles by Thomas K. Bauer

Thomas K. Bauer

Rhine-Westphalia Institute for Economic Research (RWI-Essen); University of Bochum - Faculty of Economics; IZA Institute of Labor Economics

Stefan Bender

Government of the Federal Republic of Germany - Institute for Employment Research (IAB)

Holger Bonin

IZA Institute of Labor Economics; ZEW – Leibniz Centre for European Economic Research

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Abstract

Based on a large employer-employee matched data-set, the paper investigates the effects of variable enforcement of German dismissal protection legislation on the employment dynamics in small establishments. Specifically, using a difference-in-differences approach, we study the effect of changes in the threshold scale exempting small establishments from dismissal protection provisions on worker flows. In contrast to the predictions of the theory, our results indicate that there are no statistically significant effects of dismissal protection legislation on worker turnover.

Suggested Citation

Bauer, Thomas K. and Bender, Stefan and Bonin, Holger, Dismissal Protection and Worker Flows in Small Establishments. Economica, Vol. 74, No. 296, pp. 804-821, November 2007, Available at SSRN: https://ssrn.com/abstract=1022698 or http://dx.doi.org/10.1111/j.1468-0335.2006.00562.x

Thomas K. Bauer (Contact Author)

Rhine-Westphalia Institute for Economic Research (RWI-Essen) ( email )

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Stefan Bender

Government of the Federal Republic of Germany - Institute for Employment Research (IAB) ( email )

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Holger Bonin

IZA Institute of Labor Economics ( email )

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ZEW – Leibniz Centre for European Economic Research

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