TY  - RPRT
        AU  - Verick, Sher
        TI  - Threshold Effects of Dismissal Protection Legislation in Germany
        PY  - 2004/Jan/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 991
        UR  - https://www.iza.org/publications/dp991
        AB  - In this paper we use a reform in the applicability of the Protection Against Dismissal Act or
Kündigungsschutzgesetz in Germany to identify employment effects of the legislation for
small establishments. Using a panel of establishments for the period 1997-2001, we find
some evidence that a tightening of the threshold resulted in a higher probability of
persistence and a lower probability of growth for the units in the treatment group during the
post-reform years. When using the establishment size as according to the legislation, the
effects were the strongest for establishments which were further away from the threshold.
This result could reflect the presence of other institutional barriers or adjustment costs than
those imposed by the Act. Alternatively, small establishments are unlikely to have perfect
information regarding the applicability of the legislation. This is somewhat supported by the
results when taking all employees as the measure for the establishment size. However, there
is also some evidence that these results are being driven by other factors than the reform of
the legislation.
        KW  - dismissal protection legislation
KW  - difference-in-differences
KW  - labour demand
        ER  -