Using recently developed indicators of the strictness of employment protection legislation in OECD countries, the paper examines the issue of whether strict employment protection legislation may promote self-employment by encouraging employers to contract-out work to self-employed workers. Contrary to the results of previous studies, the paper finds little evidence for a positive relationship between self-employment and the strictness of EPL. While the raw data suggest that a positive relationship may indeed exist, once suitable control variables are introduced into the analysis, it appears that if anything, the opposite may be true: i.e. stricter employment protection legislation may actually reduce self-employment.
Small Business Economics – Springer Journals
Published: Oct 11, 2004
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