Research Discussion Papers, Bank of Finland
No 30/2013:
Labor regulations and European venture capital
Ant Bozkaya ()
and William R. Kerr ()
Abstract: European nations substitute between employment protection
regulations and labor market expenditures (e.g., unemployment insurance
benefits) for providing worker insurance. Employment regulations more
directly tax firms making frequent labor adjustments than other labor
market insurance mechanisms. Venture capital investors are especially
sensitive to these labor adjustment costs. Nations favoring labor market
expenditures as the mechanism for providing worker insurance developed
stronger venture capital markets over 1990-2008, especially in high
volatility sectors. In this context, policy mechanisms are more important
than the overall level of worker insurance.
Keywords: employment protection regulations; dismissal costs; unemployment insurance benefits; private equity; venture capital; entrepreneurship; (follow links to similar papers)
JEL-Codes: G24; J21; J65; L26; M13; O31; O32; O52; (follow links to similar papers)
50 pages, December 11, 2013
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- This paper is published as:
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Bozkaya, Ant and William R. Kerr, (2014), 'Labor regulations and European venture capital', Journal of Economics and Management Strategy, Vol. 23, December, No. 4, pages 776-810
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