Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform
NBER Working Paper No. 11658
23 Pages Posted: 7 Feb 2016 Last revised: 5 Sep 2019
There are 4 versions of this paper
Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform
Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform
Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform
Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform
Date Written: September 1, 2005
Abstract
This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for firms below 15 employees, while leaving dismissal costs unchanged for bigger firms, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to big firms, especially in sectors with higher employment volatility. Moreover, we find that the reform reduced firms' employment adjustments on the internal margin as well as entry rates while increasing exit rates.
JEL Classification: E24, J63, J65
Suggested Citation: Suggested Citation