Labor Laws and Innovation

Acharya, Viral V.; Baghai, Ramin; Subramanian, Krishnamurthy

doi:10.2139/ssrn.1333621

Cited by 99 publications

(99 citation statements)

References 46 publications

(47 reference statements)

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“…Field evidence also suggests that decoupling agents' payoffs from outcomes may improve learning and exploration. For instance, and Acharya, Baghai-Wadji, and Subramanian (2009) find that innovation is encouraged by debtor-friendly bankruptcy laws and by stringent labor laws that restrict the dismissal of employees.…”

Section: A Learning and Incentives For Explorationmentioning

confidence: 99%

The Influence of Affect on Beliefs, Preferences, and Financial Decisions

Kuhnen

Knutson

2011

J. Financ. Quant. Anal.

330

178

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Neuroeconomics research shows that brain areas that generate emotional states also process information about risk, rewards, and punishments, suggesting that emotions influence financial decisions in a predictable and parsimonious way. We find that positive emotional states such as excitement induce people to take risks and to be confident in their ability to evaluate investment options, while negative emotions such as anxiety have the opposite effects. Beliefs are updated so as to maintain a positive emotional state by ignoring information that contradicts individuals' prior choices. Marketplace features or outcomes of past choices may change emotions and thus influence future financial decisions.

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Section: A Learning and Incentives For Explorationmentioning

confidence: 99%

The Influence of Affect on Beliefs, Preferences, and Financial Decisions

Kuhnen

Knutson

2011

J. Financ. Quant. Anal.

330

178

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“…4 The lawsuit alleges "wrongful discharge and breach of the implied covenant of good faith and fair dealing": 5 "(The plaintiffs) are among the most talented and successful videogame developers in the world. They created for Activision two videogame franchises, Call Of Duty and Modern Warfare, that became the most successful in the company's -indeed, the industry's -history, lining Activision's pockets with billions of dollars in revenue and creating a die-hard fan base in the millions.…”

Section: Wrongful Discharge In Innovative Industries: a Case Studymentioning

confidence: 99%

Wrongful Discharge Laws and Innovation

Acharya¹,

Baghai²,

Subramanian³

2012

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We show that wrongful discharge laws -laws that protect employees against unjust dismissal -spur innovation and new firm creation. Wrongful discharge laws, particularly those that prohibit employers from acting in bad faith ex post, limit employers' ability to hold up innovating employees after the innovation is successful. By reducing the possibility of hold-up, these laws enhance employees' innovative efforts and encourage firms to invest in risky, but potentially mould-breaking, projects. We develop a model and provide supporting empirical evidence of this effect using the staggered adoption of wrongful discharge laws across the U.S. states.

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“…Hall and Soskice (2001) argue that differences in specialisation between Germany and the US are due to the more market orientated financial and labour market institutions in the US. Acharya et al (2009) find that strong labor laws encourage innovation. Akkermans et al (2005) support the view that liberal market economies specialize in radical innovation.…”

mentioning

confidence: 99%

Employment Protection Legislation, Multinational Firms, and Innovation

Griffith

Macartney

2014

The Review of Economics and Statistics

105

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The theoretical effects of labour regulations such as employment protection legislation (EPL) on innovation is ambiguous, and empirical evidence has thus far been inconclusive. EPL increases job security and the greater enforceability of job contracts may increase worker investment in innovative activity. On the other hand EPL increases adjustment costs faced by firms, and this may lead to under-investment in activities that are likely to require adjustment, including technologically advanced innovation. In this paper we find empirical evidence that both effects are at work -multinational enterprises locate more innovative activity in countries with high EPL, however they locate more technologically advanced innovation in countries with low EPL. JEL codes: D21, F23, O31, J24

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Labor Laws and Innovation

Cited by 99 publications

References 46 publications

The Influence of Affect on Beliefs, Preferences, and Financial Decisions

The Influence of Affect on Beliefs, Preferences, and Financial Decisions

Wrongful Discharge Laws and Innovation

Employment Protection Legislation, Multinational Firms, and Innovation

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