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Author
Date
2017-11Type
- Working Paper
ETH Bibliography
yes
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Abstract
In the this paper, I analyze the effect of Employment Protection Legislation
(EPL) on investments in physical capital and labor productivity by exploiting the
fact that small establishments in Germany below a given size threshold are exempted
from certain parts of EPL. I do this by means of an Regression Discontinuity
Design (RDD) and using establishment-level data for the period 1994-2012.
Following the implications of the theoretical literature, I also analyze whether or
not EPL affects the employment margin and conduct an implicit test for the possibility
of a negative impact of EPL on investments due to hold-up by using linked
employer-employee data. I do not find a statistically significant threshold effect on
any of these outcomes– also not when analyzing the effect of EPL by industry. The
results of EPL on investments and labor productivity are consistent with the predictions
of the literature that states if EPL does not affect the employment margin,
it should also not impact any other margin of non-labor adjustment. Show more
Permanent link
https://doi.org/10.3929/ethz-b-000213967Publication status
publishedJournal / series
KOF Working PapersVolume
Publisher
KOF Swiss Economic Institute, ETH ZurichSubject
Employment protection; Investments; Labor productivityOrganisational unit
06334 - KOF FB Bildungssysteme / KOF Education Systems
02525 - KOF Konjunkturforschungsstelle / KOF Swiss Economic Institute
Related publications and datasets
Is part of: http://hdl.handle.net/20.500.11850/320396
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ETH Bibliography
yes
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