We investigate the determinants of employment and wage insurance that firms offer to their employees, by looking at characteristics that enable firms to provide more insurance to them and at country characteristics that affect workers’ need for insurance, chiefly the provision of unemployment insurance by the social security system. We find that family firms provide more employment protection but less wage stability than non-family ones, and supply less employment protection in countries where this protection is more generously provided by the social security system. Moreover, the employment protection provided by firms is priced: in particular, family firms pay a 15% lower average wage, controlling for country, industry and time effects. Finally, state-owned firms provide more employment stability than privately owned ones, and the same applies to business groups relative to standalone companies, and to multinationals relative to domestic companies.


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