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The effects of employment protection and product market regulations on the Italian labor market

The effects of employment protection and product market regulations on the Italian labor market
The effects of employment protection and product market regulations on the Italian labor market
Labor market regulations have often being blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. More recently, attention has turned to the impact of product market regulations on employment growth. This paper analyzes how labor and product market regulations interact to affect turnover and employment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employer-employee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations
in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the increase in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.
barriers to entry, costs of unjust dismissals, european unemployment
722
Universitat Pompeu Fabra
Kugler, Adrianna
71d623fa-58eb-4938-aa84-6de59b05569d
Pica, Giovanni
b040ac62-6055-4724-a6bf-eab1efc22915
Kugler, Adrianna
71d623fa-58eb-4938-aa84-6de59b05569d
Pica, Giovanni
b040ac62-6055-4724-a6bf-eab1efc22915

Kugler, Adrianna and Pica, Giovanni (2003) The effects of employment protection and product market regulations on the Italian labor market (Universitat Pompeu Fabra, Department of Economics and Business, Economics Working Papers, 722) Universitat Pompeu Fabra

Record type: Monograph (Working Paper)

Abstract

Labor market regulations have often being blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. More recently, attention has turned to the impact of product market regulations on employment growth. This paper analyzes how labor and product market regulations interact to affect turnover and employment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employer-employee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations
in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the increase in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.

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More information

Published date: 2003
Keywords: barriers to entry, costs of unjust dismissals, european unemployment

Identifiers

Local EPrints ID: 33417
URI: https://eprints.soton.ac.uk/id/eprint/33417
PURE UUID: 5ccd1a73-67fa-47e4-993c-e1c6b5bd0524

Catalogue record

Date deposited: 18 May 2006
Last modified: 26 Feb 2019 17:31

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