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Shirking and Employment Protection Legislation: Evidence from a Natural Experiment

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  • Scoppa, Vincenzo

Abstract

In 1990 a reform in Italy has modified the employment protection legislation for employees of small firms (with fewer than 16 employees) making much more costly for firms to dismiss workers, while leaving unchanged the employment protection in large firms. Using a sample of administrative data (WHIP) from National Institute of Social Security we compare absenteeism rates (used as a proxy of shirking) in small and in large firms in the years just before (1989) and after (1991) the reform, with a difference-in-differences estimator. In line with theoretical predictions, we find a strong increase (around 18%) in shirking of workers employed in small firms after the increase in dismissal costs. This finding is robust to alternative definitions of small firm and to different time periods.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16694.

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Date of creation: 31 Oct 2008
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Handle: RePEc:pra:mprapa:16694

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Keywords: Absenteeism; Shirking; Employment Protection Legislation; Difference-in-differences.;

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References

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  1. Tito Boeri & Juan F. Jimeno, 2003. "The Effects of Employment Protection: Learning from Variable Enforcement," Working Papers 252, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  2. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA).
  3. Andrea Ichino & Giovanni Maggi, 1999. "Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm," NBER Working Papers 7415, National Bureau of Economic Research, Inc.
  4. Engellandt, Axel & Riphahn, Regina T., 2005. "Temporary contracts and employee effort," Labour Economics, Elsevier, vol. 12(3), pages 281-299, June.
  5. Autor, David & Kerr, William & Kugler, Adriana, 2007. "Do Employment Protections Reduce Productivity? Evidence from U.S. States," IZA Discussion Papers 2571, Institute for the Study of Labor (IZA).
  6. Barmby, Tim & Sessions, John G & Treble, John G, 1994. " Absenteeism, Efficiency Wages and Shirking," Scandinavian Journal of Economics, Wiley Blackwell, vol. 96(4), pages 561-66.
  7. Adriana Kugler & Giovanni Pica, 2005. "Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform," NBER Working Papers 11658, National Bureau of Economic Research, Inc.
  8. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  9. Andrea Ichino & Regina T. Riphahn, 2005. "The Effect of Employment Protection on Worker Effort: Absenteeism During and After Probation," Journal of the European Economic Association, MIT Press, vol. 3(1), pages 120-143, 03.
  10. Adriana Kugler adkugler@uh.edu & Giovanni Pica, 2005. "The Effects of Employment Protection on the Italian Labour Market," CSEF Working Papers 135, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
  11. Nazmul Chaudhury & Jeffrey Hammer & Michael Kremer & Karthik Muralidharan & F. Halsey Rogers, 2006. "Missing in Action: Teacher and Health Worker Absence in Developing Countries," Journal of Economic Perspectives, American Economic Association, vol. 20(1), pages 91-116, Winter.
  12. Riphahn, Regina T., 2004. "Employment protection and effort among German employees," Economics Letters, Elsevier, vol. 85(3), pages 353-357, December.
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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Employment protection effects
    by chris dillow in Stumbling and Mumbling on 2011-01-11 13:43:39
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Cited by:
  1. Maria De Paola & Valeria Pupo & Vincenzo Scoppa, 2009. "Absenteeism In The Italian Public Sector: The Effects Of Changes In Sick Leave Compensation," Working Papers 200916, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  2. Vincenzo Scoppa & Daniela Vuri, 2013. "Absenteeism, Unemployment and Employment Protection Legislation: Evidence from Italy," CEIS Research Paper 257, Tor Vergata University, CEIS, revised 07 Jan 2013.
  3. Jones, Michael D., 2012. "How do Teachers Respond to Tenure?," MPRA Paper 43893, University Library of Munich, Germany.
  4. Marco Leonardi & Giovanni Pica, 2012. "Who pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation," Working Papers 436, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  5. Inmaculada Garcia & Colin Green & Maria Navarro Paniagua, 2012. "New Estimates of the Effect of Temporary Employment on Absenteeism," Working Papers 24151321, Lancaster University Management School, Economics Department.

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