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The Effect of Employment Protection on Worker Effort: Absenteeism During and After Probation

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Author Info
Andrea Ichino (European University Institute,)
Regina T. Riphahn (University of Basel,)

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Abstract

Employment protection systems are widely believed to generate distortions in firms' hiring and firing decisions. However, much less is known about the impact of these regulations on workers' behavior. In this paper we provide evidence on the latter question using data from a large Italian bank. Our analysis is based on weekly observations for 545 men and 313 females hired as white-collar workers between January 1993 and February 1995. These workers begin to be protected against firing only after the 12th week of tenure, and we observe them for one year. We show that-particularly for men-the number of days of absence per week increases significantly once employment protection is granted at the end of probation. This suggests that the provision of employment protection causes the increase in absenteeism. Alternative explanations based on career concerns or on learning about social norms would predict a smooth relationship between absenteeism and tenure instead of the observed discrete jump. This consequence of employment protection seems to have been neglected in European policy debates so far. (JEL: J2, D2, D8, M5) Copyright (c) 2005 by the European Economic Association.

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Article provided by MIT Press in its journal Journal of the European Economic Association.

Volume (Year): 3 (2005)
Issue (Month): 1 (03)
Pages: 120-143
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Handle: RePEc:tpr:jeurec:v:3:y:2005:i:1:p:120-143

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  1. Dionne, Georges & Dostie, Benoit, 2008. "Correlated Poisson Processes with Unobserved Heterogeneity: Estimating the Determinants of Paid and Unpaid Leave," IZA Discussion Papers 3642, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Scoppa, Vincenzo, 2008. "Shirking and Employment Protection Legislation: Evidence from a Natural Experiment," MPRA Paper 16694, University Library of Munich, Germany. [Downloadable!]
  3. Markussen, Simen & Roed, Knut & Røgeberg, Ole J. & Gaure, Simen, 2009. "The Anatomy of Absenteeism," IZA Discussion Papers 4240, Institute for the Study of Labor (IZA). [Downloadable!]
  4. Scoppa, Vincenzo, 2008. "Worker Absenteeism and Incentives: Evidence from Italy," MPRA Paper 16858, University Library of Munich, Germany. [Downloadable!]
  5. Grassi, Emanuele, 2009. "EPL and Job Contract Conversion Rate: The Italian CFL Case," MPRA Paper 12679, University Library of Munich, Germany. [Downloadable!]
  6. Olsson, Martin, 2007. "Employment Protection and Sickness Absence," Working Paper Series 717, Research Institute of Industrial Economics.
  7. De Fraja, Gianni & Oliveira, Tania & Zanchi, Luisa, 2005. "Must Try Harder. Evaluating the Role of Effort in Educational Attainment," CEPR Discussion Papers 5048, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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