Working Paper: CEPR ID: DP4379
Authors: Thomas Bauer; Stefan Bender; Holger Bonin
Abstract: Based on a large employer-employee matched dataset, 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 the dismissal protection legislation on worker turnover.
Keywords: Difference-in-Differences; Employment Protection; Linked Employer-Employee Dataset
JEL Codes: J21; J23; J58
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Weaker dismissal protection (J63) | Employment dynamics in exempted firms (J63) |
| Cross-sectional estimates (C21) | Potential threshold effects (C24) |
| Changes in dismissal protection legislation (J63) | Worker turnover (J63) |
| Increase in exemption threshold from five to ten employees (M52) | Worker turnover (J63) |
| Stringency of dismissal protection legislation (J63) | Worker turnover rates (J63) |