Publications
Publications
- 2009
- HBS Working Paper Series
Labor Regulations and European Private Equity
By: 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 insurance mechanisms. Venture capital and private equity investors are especially sensitive to these labor adjustment costs. Nations favoring labor expenditures as the mechanism for providing worker insurance developed stronger private equity markets in high volatility sectors over 1990-2004. These patterns are further evident in US investments into Europe. In this context, policy mechanisms are more important than the overall insurance level provided.
Keywords
Venture Capital; Private Equity; Insurance; Investment; Governing Rules, Regulations, and Reforms; Taxation; Employment; Europe
Citation
Bozkaya, Ant, and William R. Kerr. "Labor Regulations and European Private Equity." Harvard Business School Working Paper, No. 08-043, December 2009.