Does employment protection legislation affect firm investment? The European case

Giorgio Calcagnini, Annalisa Ferrando and Germana Giombini

Economic Modelling, 2014, vol. 36, issue C, 658-665

Abstract: This paper aims at analyzing the impact of Employment Protection Legislation (EPL) on firms' investment policies in the contemporaneous presence of financial imperfections. Our results show that investment is significantly affected by the presence of both market imperfections; they are robust to alternative measures of EPL. Moreover, the effect of labor market regulation is weaker wherever financial market imperfections are smaller: firms with better access to financial markets are in a position to determine their optimal investment policy, even in the presence of stringent employment protection laws, than those facing financial constraints.

Keywords: Employment protection legislation; Financial constraints; Investments (search for similar items in EconPapers)
JEL-codes: C23 D92 J30 (search for similar items in EconPapers)
Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (21)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S026499931300254X
Full text for ScienceDirect subscribers only

Related works:
Working Paper: Does Employment Protection Legislation Affect Firm Investment? The European Case (2009)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecmode:v:36:y:2014:i:c:p:658-665

DOI: 10.1016/j.econmod.2013.06.036

Access Statistics for this article

Economic Modelling is currently edited by S. Hall and P. Pauly

More articles in Economic Modelling from Elsevier
Bibliographic data for series maintained by Catherine Liu ().