Dismissals for Cause: The Difference That Just Eight Paragraphs Can Make
By Pedro S. Martins. Journal of Labor Economics, 2009
143 citations recorded by the source corpus.
This article presents evidence about the effects of dismissals‐for‐cause requirements, a specific component of employment protection legislation that has received little attention. I study a quasi‐experiment generated by a law introduced in Portugal: out of the 12 paragraphs in the law that dictated the costly procedure required for dismissals for cause, eight did not apply to small firms. Using matched employer‐employee longitudinal data and difference‐in‐differences methods, I examine the impact of that differentiated change in firing costs upon several variables. The results do not indicate robust effects on job or worker flows, although some estimates suggest an increase in hirings. However, firms that gain flexibility in their dismissals exhibit sizable increases in their relative performance. This finding suggests that reducing firing costs of the type studied here increases workers’ effort.
Subfields: Economics and Econometrics, Public Administration
View Paper: https://www.semanticscholar.org/paper/ef88cd631d4336c92f32015863657e7414a701b3
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In Economics and Econometrics
- John P. Martin
- N. Ramesh
- Miaomiao Zhang
- Ting Liu
- Tolga Tasdizen
- Mehran Javanmardi
- S. Scarpetta
- John C. Haltiwanger
In Public Administration
Citations in the corpus
- Setting It Right: Employment Protection, Labour Reallocation and Productivity (2011, background): “Exemptions from procedural requirements for dismissal have not been found to have a significant effect on hiring or firing in exempted firms in Portugal (Martins, 2009) and Sweden (von Below and Thoursie, 2010), perhaps because of the small economic significance of these specific exemptions.”
- Segmentation (2019, background): “Although Martins (2009) did not study excess turnover, he also did not find any impact on total job and worker flows of a reduction occured in 1989, in employment protection, for Portuguese firms.”
- Who Pays for It? The Heterogeneous Wage Effects of Employment Protection Legislation (2013, unknown): “The focus on the heterogeneity of the wage effects of EPL across workers makes this study distinct also from previous studies, which use firm-level data on wages (Bird and Knopf, 2009; Martins, 2009) or productivity (Autor et al.”