Labor regulations and European venture capital

Ant Bozkaya and William Kerr

No 30/2013, Bank of Finland Research Discussion Papers from Bank of Finland

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 market insurance mechanisms. Venture capital investors are especially sensitive to these labor adjustment costs. Nations favoring labor market expenditures as the mechanism for providing worker insurance developed stronger venture capital markets over 1990-2008, especially in high volatility sectors. In this context, policy mechanisms are more important than the overall level of worker insurance.

Keywords: employment protection regulations; dismissal costs; unemployment insurance benefits; private equity; venture capital; entrepreneurship (search for similar items in EconPapers)
JEL-codes: G24 J21 J65 L26 M13 O31 O32 O52 (search for similar items in EconPapers)
Date: 2013
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Journal Article: Labor Regulations and European Venture Capital (2014)
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