Dismissal Laws, Innovation and Economic Growth

Published By: Asian Development Bank Institute (ADB) | Published Date: May, 25 , 2018

The paper theoretically and empirically show that dismissal laws and laws that impose hurdles on firing of employees - spur innovation and thereby economic growth. Theoretically, dismissal laws make it costly for firms to arbitrarily discharge employees. This enables firms to commit to not punish short-run failures of employees. Because innovation is inherently risky and employment contracts are incomplete, dismissal laws enable such commitment.

Author(s): Krishnamurthy V. Subramanian | Posted on: May 29, 2018 | Views() | Download (146)

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