Employment Protection Laws and Privatization

Subramanian, K and Megginson, W (2018) Employment Protection Laws and Privatization. The Journal of Law and Economics, 61 (1). pp. 97-123.

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Abstract

AbstractIs privatization in a country related to the stringency of its employment protection laws (EPLs)—and, if so, how? We address these questions using privatization deals in 14 European countries over 3 decades and the changes in EPLs in a country. Using traditional difference-in-differences tests exploiting major changes and generalized difference-in-differences tests for the full sample, we find that stringent EPLs discourage privatization. For identification, we use two sets of triple-difference tests that control for country-level omitted variables using fixed effects for each country-year pair. First, using cross-sectional differences across industries in a country, we find that the effect of EPLs on privatization is disproportionately greater in industries in which separation rates and relocation rates are higher. Second, using productivity measures for US industries as an instrument, we find that the effect of EPLs on privatization is disproportionately greater in less productive industries.

Affiliation: Indian School of Business
ISB Creators:
ISB CreatorsORCiD
Subramanian, KUNSPECIFIED
Item Type: Article
Uncontrolled Keywords: Employment, Protection Laws, Privatization
Subjects: Finance
Policy
Depositing User: Ilayaraja M
Date Deposited: 08 Jun 2019 13:31
Last Modified: 09 Jun 2019 19:10
URI: http://eprints.exchange.isb.edu/id/eprint/1033
Publisher URL: https://doi.org/10.1086/698212
Publisher OA policy: http://sherpa.ac.uk/romeo/issn/0022-2186/
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