IDEAS home Printed from https://ideas.repec.org/a/bpj/bejeap/v22y2022i3p611-621n8.html
   My bibliography  Save this article

Employment Protection, Workforce Mix and Firm Performance

Author

Listed:
  • Ardito Chiara

    (Department of Economics and Statistics, University of Torino, Lungo Dora Siena, 100/A, Torino 10153, Italy)

  • Berton Fabio

    (Department of Economics and Statistics, University of Torino, Lungo Dora Siena, 100/A, Torino 10153, Italy)

  • Pacelli Lia

    (Department of Economics and Statistics, University of Torino, Lungo Dora Siena, 100/A, Torino 10153, Italy)

  • Passerini Filippo

    (Department of Economics and Finance, Catholic University of Milan, Via Necchi, 5, Milan 20123, Italy)

Abstract

We measure the impact of employment protection reduction in an uncertain framework on firms’ hires and performance, exploiting the Italian 2015 Jobs Act. Results indicate that firms (1) stabilize workforce mainly through contract transformations of low-tenure and low-human-capital incumbent workers performing high-physical and low-intellectual tasks; (2) apply a cost-saving strategy that increases profits and decreases value added per-head. Effects are stronger among non-exporting and non-innovative firms. Our evidence casts doubts on the effectiveness of employment protection reductions in enhancing productivity in the long run.

Suggested Citation

  • Ardito Chiara & Berton Fabio & Pacelli Lia & Passerini Filippo, 2022. "Employment Protection, Workforce Mix and Firm Performance," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 22(3), pages 611-621, July.
    • Handle: RePEc:bpj:bejeap:v:22:y:2022:i:3:p:611-621:n:8
    DOI: 10.1515/bejeap-2021-0396
    as

    Download full text from publisher

    File URL: https://doi.org/10.1515/bejeap-2021-0396
    Download Restriction: For access to full text, subscription to the journal or payment for the individual article is required.
    File URL: https://libkey.io/10.1515/bejeap-2021-0396?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lorenzo Cappellari & Carlo Dell’Aringa & Marco Leonardi, 2012. "Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms," Economic Journal, Royal Economic Society, vol. 122(562), pages 188-215, August.
    2. Hijzen, Alexander & Mondauto, Leopoldo & Scarpetta, Stefano, 2017. "The impact of employment protection on temporary employment: Evidence from a regression discontinuity design," Labour Economics, Elsevier, vol. 46(C), pages 64-76.
    3. Kampelmann, Stephan & Rycx, François, 2012. "The impact of educational mismatch on firm productivity: Evidence from linked panel data," Economics of Education Review, Elsevier, vol. 31(6), pages 918-931.
    4. Bjuggren, Carl Magnus, 2018. "Employment protection and labor productivity," Journal of Public Economics, Elsevier, vol. 157(C), pages 138-157.
    5. Samuel Bentolila & Giuseppe Bertola, 1990. "Firing Costs and Labour Demand: How Bad is Eurosclerosis?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 57(3), pages 381-402.
    6. Rachel Griffith & Gareth Macartney, 2014. "Employment Protection Legislation, Multinational Firms, and Innovation," The Review of Economics and Statistics, MIT Press, vol. 96(1), pages 135-150, March.
    7. Selwaness, Irène & Zaki, Chahir, 2019. "On the interaction between exports and labor market regulation: Evidence from the MENA countries," The Quarterly Review of Economics and Finance, Elsevier, vol. 73(C), pages 24-33.
    8. Paolo Sestito & Eliana Viviano, 2018. "Firing costs and firm hiring: evidence from an Italian reform," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 101-130.
    9. repec:iab:iabjlr:v:51:i:1:p:art.3 is not listed on IDEAS
    10. David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Does Employment Protection Reduce Productivity? Evidence From US States," Economic Journal, Royal Economic Society, vol. 117(521), pages 189-217, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pierre Cahuc & Pauline Carry & Franck Malherbet & Pedro S. Martins, 2023. "Spillover effects of employment protection," Nova SBE Working Paper Series wp655, Universidade Nova de Lisboa, Nova School of Business and Economics.
    2. Giuseppe Grasso & Konstantinos Tatsiramos, 2023. "The Impact of Restricting Fixed-Term Contracts on Labor and Skill Demand," CESifo Working Paper Series 10693, CESifo.
    3. Bottasso, Anna & Bratti, Massimiliano & Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2023. "Labor Market Regulation and Firm Adjustments in Skill Demand," IZA Discussion Papers 16262, Institute of Labor Economics (IZA).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pawel Chrostek & Krzysztof Karbownik & Michal Myck, 2024. "Labor Market Externalities of Pre-Retirement Employment Protection," CESifo Working Paper Series 11078, CESifo.
    2. Maria De Paola & Roberto Nisticò & Vincenzo Scoppa, 2020. "Fertility Decisions And Employment Protection: The Unintended Consequences Of The Italian Jobs Act," Working Papers 202003, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    3. Bottasso, Anna & Bratti, Massimiliano & Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2023. "Labor Market Regulation and Firm Adjustments in Skill Demand," IZA Discussion Papers 16262, Institute of Labor Economics (IZA).
    4. Diego Daruich & Sabrina Di Addario & Raffaele Saggio, 2023. "The Effects of Partial Employment Protection Reforms: Evidence from Italy," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 90(6), pages 2880-2942.
    5. Jeon, Haejun & Cui, Xue & Zhang, Chuanqian, 2023. "The effects of labor choice on investment and output dynamics," Journal of Corporate Finance, Elsevier, vol. 83(C).
    6. Bentolila, Samuel & Dolado, Juan J. & Jimeno, Juan F., 2019. "Dual Labour Markets Revisited," IZA Discussion Papers 12126, Institute of Labor Economics (IZA).
    7. Nico Dewaelheyns & Cynthia Van Hulle & Yannick Van Landuyt & Mathias Verreydt, 2021. "Labor Contracts, Wages and SME Failure," Sustainability, MDPI, vol. 13(14), pages 1-15, July.
    8. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2019. "Employment Protection and Firm-Provided Training: Quasi-Experimental Evidence from a Labour Market Reform," IZA Discussion Papers 12773, Institute of Labor Economics (IZA).
    9. Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni, 2021. "Employment protection and firm-provided training in dual labour markets," Labour Economics, Elsevier, vol. 69(C).
    10. Karpuz, Ahmet & Kim, Kirak & Ozkan, Neslihan, 2020. "Employment protection laws and corporate cash holdings," Journal of Banking & Finance, Elsevier, vol. 111(C).
    11. Li, Guangzhong & Fujiyama, Keishi & Wu, Cen & Zheng, Ying, 2024. "Employment protection, corporate governance, and labor productivity around the World," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 92(C).
    12. Marco Bee & Julien Hambuckers, 2020. "Modeling multivariate operational losses via copula-based distributions with g-and-h marginals," DEM Working Papers 2020/3, Department of Economics and Management.
    13. Giovanna Vallanti & Giuseppina Gianfreda, 2021. "Informality, regulation and productivity: do small firms escape EPL through shadow employment?," Small Business Economics, Springer, vol. 57(3), pages 1383-1412, October.
    14. Marco Bertoni & Simone Chinetti & Roberto Nisticò, 2023. "Employment Protection, Job Insecurity, and Job Mobility," CSEF Working Papers 684, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    15. García-Vega, María & Kneller, Richard & Stiebale, Joel, 2021. "Labor market reform and innovation: Evidence from Spain," Research Policy, Elsevier, vol. 50(5).
    16. Philippe Aghion & Antonin Bergeaud & John Van Reenen, 2023. "The Impact of Regulation on Innovation," American Economic Review, American Economic Association, vol. 113(11), pages 2894-2936, November.
    17. Claudia Pigini & Stefano Staffolani, 2022. "Firing Costs and Job Loss: The Case of the Italian Jobs Act," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(1), pages 105-143, March.
    18. Gnocato, Nicolò & Modena, Francesca & Tomasi, Chiara, 2020. "Labor market reforms and allocative efficiency in Italy," Labour Economics, Elsevier, vol. 67(C).
    19. Andrea Caggese & Ozan Guler & Mike Mariathasan & Klaas Mulier, 2022. "Firing Costs and Productivity: Evidence from a Natural Experiment," Working Papers 1376, Barcelona School of Economics.
    20. Jian Ding & Yixiao Zhou, 2021. "Did the Labor Contract Law Affect the Capital Deepening and Efficiency of Chinese Private Firms?," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 29(5), pages 105-126, September.

    More about this item

    Keywords

    employment protection; human capital; productivity; tenure; tasks;
    All these keywords.

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bpj:bejeap:v:22:y:2022:i:3:p:611-621:n:8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Peter Golla (email available below). General contact details of provider: https://www.degruyter.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.