Collective dismissal costs are an important part of employment protection legislation (EPL) and make firms' exit more costly. We show in a model with step-by-step innovations that dismissal costs spur innovation if product markets are not too competitive: technologically more advanced firms...

It is commonly argued that labor market institutions such as employment protection worsen an economy’s performance and particularly so, if product markets become more competitive. Empirical evidence, however, has difficulties to detect a robust negative correlation between employment...

Recent empirical studies suggest a need for a ?exible patent regime responding to industry characteristics. In practice, sector-speci?c modi?cations of patent strength already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what direction...

This paper analyzes the growth and welfare effects of competition in an endogenously-growing economy with imitation and non-diversifiable risk. The main findings are as follows. There is no imitation without positive profits during innovation races. A larger proportion of competing industries...

A common assumption in the Schumpeterian growth literature is that the innovation size is constant and identical across industries. This is in contrast with the empirical evidence which shows that: (i) the innovation size is far from being identical across industries; and (ii) the size...

Product market regulation and employment protection are highly correlated across OECD countries. Using an augmented model of monopolistic competition we show why in countries with more regulated product markets, incumbent workers prefer to protect jobs relatively more. Product market regulation...

Do institutional firing costs slow the diffusion of information and communications technology (ICT)? The paper develops a model in which, as the technology at a given plant drops behind the best practice, it optimally reduces its workforce. As a result, firing costs are particularly detrimental...

This paper analyzes the effect of firing costs on aggregate productivity growth. For this purpose, a model of endogenous growth through selection and imitation is developed. It is consistent with recent evidence on firm dynamics and on the importance of reallocation for productivity growth. In...

I propose a Schumpeterian analysis of the growth and welfare effects of a deficit-financed cut of the tax rate on distributed dividends. I find that income per capita growth initially accelerates and then decelerates, eventually converging to a long-run value lower than the starting one....

Our interest in writing this article is to create a bridge between the scholarly and academic research on technological innovation and a private sector, for-profit business model that implements the ideas on innovation and entrepreneurship, primarily in metro regional economies.In this article...