Effects of Dismissal Protection Legislation on Individual Employment Stability in Germany

Bernhard Boockmann (bernhard.boockmann@iaw.edu), Daniel Gutknecht (gutknecht@econ.uni-frankfurt.de) and Susanne Steffes

No 45, IAW Discussion Papers from Institut für Angewandte Wirtschaftsforschung (IAW)

Abstract: Changes in Dismissal Protection Legislation in Germany have been a subject to ongoing research in the past decade. The majority of these studies, however, has not been able to determine significant effects on job and worker flows in firms affected by the reforms. We estimate the impact of dismissal protection on individual employment stability using the 1999 reform as a "natural experiment".We provide insights into the effects of legislation on the firms’ matching behaviour. Our results hint at increased job security after the reform for those spells affected by it. This rise in stability was, however, accompanied by modest instability at start suggesting that firms facing additional firing costs tend to cease probation to shed unproductive job-worker matches. The latter effect, however, was not found to be significant.

Keywords: J32; J65; C41 (search for similar items in EconPapers)
JEL-codes: C41 J32 J65 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2008-10
New Economics Papers: this item is included in nep-lab and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:iaw:iawdip:45

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