Labor Regulations and European Private Equity

37 Pages Posted: 4 Jan 2010 Last revised: 29 Oct 2014

See all articles by Ant Bozkaya

Ant Bozkaya

Harvard Business School; MIT Sloan School Global Economics & Management Group; NBER Innovation Policy and the Economy Group

William Kerr

Harvard University - Entrepreneurial Management Unit

Date Written: December 2009

Abstract

European nations substitute between employment protection regulations and labor market expenditures (e.g., unemployment insurance benefits) for providing worker insurance. Employment regulations more directly tax firms making frequent labor adjustments than other labor insurance mechanisms. Venture capital and private equity investors are especially sensitive to these labor adjustment costs. Nations favoring labor expenditures as the mechanism for providing worker insurance developed stronger private equity markets in high volatility sectors over 1990-2004. These patterns are further evident in US investments into Europe. In this context, policy mechanisms are more important than the overall insurance level provided.

Suggested Citation

Bozkaya, Ant and Kerr, William R., Labor Regulations and European Private Equity (December 2009). NBER Working Paper No. w15627. Available at SSRN: https://ssrn.com/abstract=1530123

Ant Bozkaya (Contact Author)

Harvard Business School ( email )

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MIT Sloan School Global Economics & Management Group ( email )

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HOME PAGE: http://www.bozkaya.org

NBER Innovation Policy and the Economy Group ( email )

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HOME PAGE: http://www.bozkaya.org

William R. Kerr

Harvard University - Entrepreneurial Management Unit ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

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