Employment Protection Legislation, Multinational Firms and Innovation
48 Pages Posted: 18 Jan 2010
Date Written: January 2010
Abstract
The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work - multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL.
Keywords: employment protection, Innovation, multinational firm location
JEL Classification: D21, F23, J24, O31
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
The Effects of Emu on Structural Reforms in Labour and Product Markets
By Romain Duval and Jörgen Elmeskov
-
Why are European Countries Diverging in Their Unemployment Experience?
-
Why are European Countries Diverging in Their Unemployment Experience?
-
The Intriguing Nexus between Corruption and Capital Account Restrictions
By Axel Dreher and Lars H.r. Siemers
-
Awareness of General Equilibrium Effects and Unemployment
By Hans Gersbach and Achim Schniewind
-
Awareness of General Equilibrium Effects and Unemployment
By Hans Gersbach and Achim Schniewind
-
Learning of General Equilibrium Effects and the Unemployment Trap
By Hans Gersbach and Achim Schniewind
-
Structural Reforms and the Macroeconomy: The Role of General Equilibrium Effects