Bartelsman, Eric J.
[VerfasserIn]
;
Gautier, Pieter A.
[Sonstige Person, Familie und Körperschaft];
de Wind, Joris
[Sonstige Person, Familie und Körperschaft]
Employment Protection, Technology Choice, and Worker Allocation
Erschienen in:Tinbergen Institute Discussion Paper TI 2010-042/3
Umfang:
1 Online-Ressource (49 p)
Sprache:
Englisch
DOI:
10.2139/ssrn.1592162
Identifikator:
Entstehung:
Anmerkungen:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 16, 2010 erstellt
Beschreibung:
Using a country-industry panel dataset (EUKLEMS) we uncover a robust empirical regularity, namely that high-risk innovative sectors are relatively smaller in countries with strict employment protection legislation (EPL). To understand the mechanism, we develop a two-sector matching model where firms endogenously choose between a safe technology with known productivity and a risky technology with productivity subject to sizeable shocks. Strict EPL makes the risky technology relatively less attractive because it is more costly to shed workers upon receiving a low productivity draw. We calibrate the model using a variety of aggregate, industry and micro-level data sources. We then simulate the model to reflect both the observed differences across countries in EPL and the observed increase since the mid-1990s in the variance of firm performance associated with the adoption of information and communication technology. The simulations produce a differential response to the arrival of risky technology between low- and high-EPL countries that coincides with the findings in the data. The described mechanism can explain a considerable portion of the slowdown in productivity in the EU relative to the US since 1995