Labour Turnover and Unionism in Italy

Recent research on the functioning of labour markets has placed great emphasis on the role of job turnover. Turnover rates have important implications for wage determination, work organisation, career prospects and various other aspects of the employment relationship. A topic which has not received much attention in the literature is concerned with the impact of unions on firms' accession-separation decisions. Union practices are deemed to have a significant impact on firms' turnover rate influencing both hiring and quits-dismissals decisions. The present paper attempts to explore union effects on turnover in the context of the Italian labour market. Different theoretical implications for the analysis of accessions and separations rates within the establishment is presented and discussed. The empirical model is then specified and estimated using establishment level data for the Italian metal-mechanical engineering industry. In the attempt to ascertain the different routes through which union presence affects turnover rates, a different treatment of the various sources of separations (quits, incentivated separations, dismissals) is proposed. Empirical evidence suggests that Italian trade unions have succeeded in reducing turnover.