Employment Protection and Relocation with Firm Heterogeneity : Department of Economics, Finance and Accounting Discussion Papers Series, N234-13


Dewit, Gerda and Görg, Holger and Temouri, Yama (2013) Employment Protection and Relocation with Firm Heterogeneity : Department of Economics, Finance and Accounting Discussion Papers Series, N234-13. Working Paper. NUI Maynooth.

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Abstract

This paper examines the determinants of the decision to relocate activities abroad for firms that are located in 29 OECD countries. Our theoretical model suggests that firm heterogeneity plays a crucial role for the link between employment protection and relocation. Stricter employment protection laws in the home country discourages firms’ relocation activity. While larger, more productive firms and firms with higher labour intensities have, ceteris paribus, higher propensities to relocate, these firms also face higher exit barriers if the country from which they consider relocating has strict employment protection laws. Our theoretical predictions are supported empirically, with consistent results for firms operating in the manufacturing sector.

Item Type: Monograph (Working Paper)
Keywords: Employment Protection; Relocation with Firm Heterogeneity;
Academic Unit: Faculty of Social Sciences > Economics, Finance and Accounting
Item ID: 4391
Identification Number: N234-13
Depositing User: Ms Sandra Doherty
Date Deposited: 11 Jun 2013 10:25
Publisher: NUI Maynooth
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