Employment protection legislation and entrepreneurial activity

Werner Liebregts*, Erik Stam

*Corresponding author for this work

Research output: Contribution to journalArticleScientificpeer-review

Abstract

Labour market institutions enable and constrain individual behaviour on the labour market and beyond. We investigate two main elements of national employment protection legislation and their effects upon entrepreneurial activity. We use multilevel analyses to estimate the separate impact of redundancy payments and the notice period for employers on independent entrepreneurship (self-employment) and entrepreneurial employee activity. Redundancy payments and notice period reflect labour market friction, opportunity cost, search time and liquidity constraint mechanisms contained in employment protection legislation. Country-level legislation on the notice period for employers is found to be positively related to an individual's involvement in entrepreneurial employee activity, yet negatively related to self-employment. We do not find consistent effects of redundancy pay legislation on entrepreneurial activity.

Original languageEnglish
Pages (from-to)581-603
Number of pages23
JournalInternational Small Business Journal
Volume37
Issue number6
DOIs
Publication statusPublished - 2019

Keywords

  • employment protection legislation
  • entrepreneurial employee activity
  • labour market frictions
  • liquidity constraints
  • notice period
  • opportunity costs
  • redundancy pay
  • search time
  • self-employment
  • OPPORTUNITY COSTS
  • JOB SECURITY
  • INTRAPRENEURSHIP
  • INSTITUTIONS
  • ALLOCATION
  • DECISIONS
  • MOBILITY
  • POLICY
  • LEVEL
  • FIRMS

Cite this

@article{28a2bec4313346f1ad858cd040fea502,
title = "Employment protection legislation and entrepreneurial activity",
abstract = "Labour market institutions enable and constrain individual behaviour on the labour market and beyond. We investigate two main elements of national employment protection legislation and their effects upon entrepreneurial activity. We use multilevel analyses to estimate the separate impact of redundancy payments and the notice period for employers on independent entrepreneurship (self-employment) and entrepreneurial employee activity. Redundancy payments and notice period reflect labour market friction, opportunity cost, search time and liquidity constraint mechanisms contained in employment protection legislation. Country-level legislation on the notice period for employers is found to be positively related to an individual's involvement in entrepreneurial employee activity, yet negatively related to self-employment. We do not find consistent effects of redundancy pay legislation on entrepreneurial activity.",
keywords = "employment protection legislation, entrepreneurial employee activity, labour market frictions, liquidity constraints, notice period, opportunity costs, redundancy pay, search time, self-employment, OPPORTUNITY COSTS, JOB SECURITY, INTRAPRENEURSHIP, INSTITUTIONS, ALLOCATION, DECISIONS, MOBILITY, POLICY, LEVEL, FIRMS",
author = "Werner Liebregts and Erik Stam",
year = "2019",
doi = "10.1177/0266242619836358",
language = "English",
volume = "37",
pages = "581--603",
journal = "International Small Business Journal",
issn = "0266-2426",
publisher = "Sage Publications Ltd",
number = "6",

}

Employment protection legislation and entrepreneurial activity. / Liebregts, Werner; Stam, Erik.

In: International Small Business Journal, Vol. 37, No. 6, 2019, p. 581-603.

Research output: Contribution to journalArticleScientificpeer-review

TY - JOUR

T1 - Employment protection legislation and entrepreneurial activity

AU - Liebregts, Werner

AU - Stam, Erik

PY - 2019

Y1 - 2019

N2 - Labour market institutions enable and constrain individual behaviour on the labour market and beyond. We investigate two main elements of national employment protection legislation and their effects upon entrepreneurial activity. We use multilevel analyses to estimate the separate impact of redundancy payments and the notice period for employers on independent entrepreneurship (self-employment) and entrepreneurial employee activity. Redundancy payments and notice period reflect labour market friction, opportunity cost, search time and liquidity constraint mechanisms contained in employment protection legislation. Country-level legislation on the notice period for employers is found to be positively related to an individual's involvement in entrepreneurial employee activity, yet negatively related to self-employment. We do not find consistent effects of redundancy pay legislation on entrepreneurial activity.

AB - Labour market institutions enable and constrain individual behaviour on the labour market and beyond. We investigate two main elements of national employment protection legislation and their effects upon entrepreneurial activity. We use multilevel analyses to estimate the separate impact of redundancy payments and the notice period for employers on independent entrepreneurship (self-employment) and entrepreneurial employee activity. Redundancy payments and notice period reflect labour market friction, opportunity cost, search time and liquidity constraint mechanisms contained in employment protection legislation. Country-level legislation on the notice period for employers is found to be positively related to an individual's involvement in entrepreneurial employee activity, yet negatively related to self-employment. We do not find consistent effects of redundancy pay legislation on entrepreneurial activity.

KW - employment protection legislation

KW - entrepreneurial employee activity

KW - labour market frictions

KW - liquidity constraints

KW - notice period

KW - opportunity costs

KW - redundancy pay

KW - search time

KW - self-employment

KW - OPPORTUNITY COSTS

KW - JOB SECURITY

KW - INTRAPRENEURSHIP

KW - INSTITUTIONS

KW - ALLOCATION

KW - DECISIONS

KW - MOBILITY

KW - POLICY

KW - LEVEL

KW - FIRMS

U2 - 10.1177/0266242619836358

DO - 10.1177/0266242619836358

M3 - Article

VL - 37

SP - 581

EP - 603

JO - International Small Business Journal

JF - International Small Business Journal

SN - 0266-2426

IS - 6

ER -