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Enforcement of Employment Protection and the hiring behaviour of firms. Evidence from a large Italian region

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  • Elisabetta Trevisan

    ()
    (Department of Economics, University Of Venice Cà Foscari)

Abstract

This paper investigates the effect of the Employment Protection Legislation (EPL) on the hiring behaviour of the firms when the level of EPL is differentiated by firms size. In this respect, Italy represents an interesting case because workers hired by bigger firms enjoy a stronger protection than workers hired by small firms; the threshold size is fixed by law at 15 employees. A model derives the conditions under which firms decide whether to upsize or not and, in case of upsizing, whether to hire temporary (i.e. workers who are not counted in the threshold, as apprentices in Italy) or permanent workers. The model has been tested using data drawn from the VWH (Veneto Workers History) registered data for firms and workers, from 1982 to 1997, for a large Italian region (i.e. Veneto). Firms close to the threshold are not scared to growth but they are more likely to hire apprentices than permanent workers.

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Bibliographic Info

Paper provided by Department of Economics, University of Venice "Ca' Foscari" in its series Working Papers with number 2008_25.

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Length: 31
Date of creation: 2008
Date of revision:
Handle: RePEc:ven:wpaper:2008_25

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Related research

Keywords: Employment Protection; Hiring; Random Effects; Regression Discontinuity Design.;

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References

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  1. Patrizio Pagano & Fabiano Schivardi, 2003. "Firm Size Distribution and Growth," Scandinavian Journal of Economics, Wiley Blackwell, vol. 105(2), pages 255-274, 06.
  2. David Card & Lara D. Shore-Sheppard, 2002. "Using Discontinuous Eligibility Rules to Identify the Effects of the Federal Medicaid Expansions on Low Income Children," NBER Working Papers 9058, National Bureau of Economic Research, Inc.
  3. Pietro Garibaldi & Lia Pacelli & Andrea Borgarello, 2003. "Employment Protection Legislation and the Size of Firms," Working Papers 247, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  4. Adriana D. Kugler, 1999. "The impact of firing costs on turnover and unemployment: Evidence from the Colombian labour market reform," Economics Working Papers 388, Department of Economics and Business, Universitat Pompeu Fabra.
  5. Fabiano Schivardi & Roberto Torrini, 2004. "Threshold effects and firm size: the case of firing costs," LSE Research Online Documents on Economics 19956, London School of Economics and Political Science, LSE Library.
  6. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  7. Bertola, Giuseppe, 1999. "Microeconomic perspectives on aggregate labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 45, pages 2985-3028 Elsevier.
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Cited by:
  1. Henrekson, Magnus & Johansson, Dan & Stenkula, Mikael, 2010. "Taxation, Labor Market Policy and High-Impact Entrepreneurship," Ratio Working Papers 149, The Ratio Institute.
  2. Gielen, Anne C. & Tatsiramos, Konstantinos, 2012. "Quit Behavior and the Role of Job Protection," IZA Discussion Papers 6540, Institute for the Study of Labor (IZA).

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