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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Lutz Bellmann & Hans-Dieter Gerner & Christian Hohendanner, 2014. "Fixed-term contracts and dismissal protection. Evidence from a policy reform in Germany," Working Paper Series in Economics 320, University of Lüneburg, Institute of Economics.
    • Handle: RePEc:lue:wpaper:320
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    References listed on IDEAS

    as
    1. Thomas K. Bauer & Stefan Bender & Holger Bonin, 2007. "Dismissal Protection and Worker Flows in Small Establishments," Economica, London School of Economics and Political Science, vol. 74(296), pages 804-821, November.
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    3. Stefan Bauernschuster, 2013. "Dismissal protection and small firms’ hirings: evidence from a policy reform," Small Business Economics, Springer, vol. 40(2), pages 293-307, February.
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    5. Per Skedinger, 2010. "Employment Protection Legislation," Books, Edward Elgar Publishing, number 13686.
    6. Verick, Sher, 2004. "Threshold Effects of Dismissal Protection Legislation in Germany," IZA Discussion Papers 991, Institute of Labor Economics (IZA).
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    8. Centeno, Mário & Novo, Álvaro A., 2012. "Excess worker turnover and fixed-term contracts: Causal evidence in a two-tier system," Labour Economics, Elsevier, vol. 19(3), pages 320-328.
    9. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627, Elsevier.
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    Cited by:

    1. Kai Priesack, 2015. "Employment consequences of changes in dismissal protection: Evidence from a 2004 German reform," BDPEMS Working Papers 2015012, Berlin School of Economics.

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