Separating introduction effects from selectivity effects

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2011-11-03

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Abstract

This study examines differences in employment growth between firms with and without works councils by separating introduction effects from potential selectivity effects. Using a difference in differences framework, we show that firms with works councils have higher employment growth before establishing a works council. However, employment growth declines after introduction. We identify the reason for lower employment growth in reduced hiring rates but constant dismissal rates.

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Keywords

difference -in- differences, dismissals, employment growth, hires, works councils

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