What determines the costs of employment protection legislation for employers? Evidence from cross-country enterprise surveys

The article examines the determinants of the costs incurred by employers while they fulfill the requirements of employment protection legislation. Using the World Bank Enterprise Surveys data from over 50,000 firms in 93 countries in 2005-2011 we verify that, ceteris paribus, these costs are higher for large, private, domestically owned firms in the manufacturing sector, as well as for those enterprises which are more covered by enforcement. With firm characteristics held constant, the costs of employment protection are significantly higher in more developed countries with stricter regulation of temporary employment and higher relative minimum wage, and are considerably less in countries with socialist and German legal systems than in the common law countries. Reprinted by permission of "Voprosy Ekonomiki"