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The Effects Of Employment Protection and Product Market Regulations on The Italian Labor Market

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Author Info
Kugler, Adriana
Pica, Giovanni

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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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Paper provided by Economics Division, School of Social Sciences, University of Southampton in its series Discussion Paper Series In Economics And Econometrics with number 0310.

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Date of creation: 01 Nov 2003
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Handle: RePEc:stn:sotoec:0310

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  3. Boeri, Tito & Nicoletti, Giuseppe & Scarpetta, Stefano, 2000. "Regulation And Labour Market Performance," CEPR Discussion Papers 2420, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  32. Adriana Kugler & Juan F. Jimeno & Virginia Hernanz, . "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labor Market Reforms," Working Papers 2003-14, FEDEA. [Downloadable!]
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Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  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. [Downloadable!]
    Other versions:
  2. Marcello M. Estevão, 2005. "Product Market Regulation and the Benefits of Wage Moderation," IMF Working Papers 05/191, International Monetary Fund. [Downloadable!]
  3. Kugler, Adriana D. & Pica, Giovanni, 2005. "Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform," CEPR Discussion Papers 5256, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  4. Schivardi, Fabiano & Torrini, Roberto, 2005. "Identifying the Effects of Firing Restrictions Through Size-Contingent Differences in Regulation," CEPR Discussion Papers 5303, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  5. Adriana Kugler, 2004. "The Effect of Job Security Regulations on Labor Market Flexibility: Evidence from the Colombian Labor Market Reform," NBER Working Papers 10215, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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