Fixed-term contracts and dismissal protection. Evidence from a policy reform in Germany

Lutz Bellmann, Hans-Dieter Gerner and Christian Hohendanner
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Lutz Bellmann: University of Erlangen-Nuremberg
Hans-Dieter Gerner: Institute of Employment Research, Nuremberg
Christian Hohendanner: Institute of Employment Research, Nuremberg, University of Erlangen-Nuremberg

No 320, Working Paper Series in Economics from University of Lüneburg, Institute of Economics

Abstract: In our paper, we analyze the impact of German employment protection legislation on the firms’ employment adjustment patterns. We explore a reform of the Protection Against Dismissal Act (PADA) in 2004 that decreased the employment protection in small establishments and thus generated a quasi-experiment. Extending previous studies we distinguish between open-ended and fixed-term contracts, as the latter might be used to circumvent the PADA. Difference-in-differences estimations based on IAB Establishment Panel data show no overall effect of the reform on firms’ employment adjustment patterns. However, the proportion of hirings based on fixed-term contracts decreases.

Pages: 22 pages
Date: 2014-11
New Economics Papers: this item is included in nep-eur
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