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Title:Relaxed dismissal protection: effects on the hiring and firing behaviour of small firms PDF Logo
Authors:Bauernschuster, Stefan
Issue Date:2009
Series/Report no.:Jena economic research papers 2009,015
Abstract:Small firms are seen as important drivers of dynamics and innovation. They need to be particularly flexible and be able to react quickly to new challenges. This paper uses the latest change in dismissal protection legislation in Germany as a natural experiment and tries to find causal effects on the hiring and firing behaviour of small firms. Using a difference-indifferences approach, I find only small but positive effects on the total number of hirings. However, there are substantial substitution effects from temporary contract hirings to permanent contract hirings. The results remain robust when using count data models and applying fixed effects specifications.
Subjects:Employment protection
small business
worker flows
JEL:J38
K31
M21
Document Type:Working Paper
Appears in Collections:Jena Economic Research Papers, MPI für Ökonomik

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