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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 been blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. This paper analyzes how labor and product market regulations interact to affect turnover and unemployment. 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 reduction in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.
310
University of Southampton
Kugler, Adriana
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Pica, Giovanni
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Kugler, Adriana
9ef17e0d-78e2-43ba-b68f-8ef2a526943b
Pica, Giovanni
b040ac62-6055-4724-a6bf-eab1efc22915

Kugler, Adriana and Pica, Giovanni (2003) The effects of employment protection and product market regulations on the Italian labor market (Discussion Papers in Economics and Econometrics, 310) Southampton. University of Southampton

Record type: Monograph (Discussion Paper)

Abstract

Labor market regulations have often been blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. This paper analyzes how labor and product market regulations interact to affect turnover and unemployment. 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 reduction in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.

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Published date: 2003

Identifiers

Local EPrints ID: 33498
URI: http://eprints.soton.ac.uk/id/eprint/33498
PURE UUID: 26551a08-f17e-419e-b06e-1b984df1275a

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Date deposited: 18 May 2006
Last modified: 15 Mar 2024 07:44

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Contributors

Author: Adriana Kugler
Author: Giovanni Pica

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