Employment consequences of changes in dismissal protection: Evidence from a 2004 German reform

Kai Priesack ()
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Kai Priesack: Humboldt-Universität zu Berlin

No 2015012, BDPEMS Working Papers from Berlin School of Economics

Abstract: This paper empirically analyzes the impact of a change in dismissal protection on employment dynamics and temporary employment patterns in small establishments. The identification strategy relies on a quasi-experimental change in the German Protection Against Dismissal Act (PADA) in 2004. Due to a raise of the minimum firm size threshold determining coverage by the PADA, dismissal protection was relaxed for some establishments. Using matched employer-employee administrative data linked to establishment survey data, we estimate the causal effect of the reform on worker and job flow rates and the use of temporary employment. We find evidence for a short-term increase in overall worker flow rates which does, however, not persist in the medium-term. Reestimation by gender suggests that the effect on the hiring rate is driven by women while the effect on the separation rate is driven by men. There is no robust evidence for an effect on the overall job flow rate and the share of employees on fixed-term contracts or temporary agency workers.

Keywords: Dismissal protection; worker flows; temporary employment (search for similar items in EconPapers)
JEL-codes: J21 J23 J38 (search for similar items in EconPapers)
Date: 2015-08-20
New Economics Papers: this item is included in nep-eur
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