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Employment Protection and Regional Worker Flows in Italy

  • Naticchioni Paolo
  • Rustichelli Emiliano
  • Scialà Antonio

In this paper we point out that the theoretical predictions concerning Employment Protection Legislation (EPL) are not fully confirmed by empirical evidence in Italy, a strict EPL country in the '90s, according to OECD indexes. In particular, worker and job flow rates are remarkably high, also in comparison with the other European countries. Furthermore, the differences in regional worker flow rates - computed on both the social security database and the LFS - are relevant, no matter which measure of worker flows is considered. While EPL is the same across regions, the highest worker flow rates are observed in the South, an area generally recognised as the least dynamic of the country, followed by the North-East, the Centre and the North-West. For possible alternative explanations of regional differences investigation focuses on economic structural composition, the black labour market, non-standard contracts, the public sector and self-employment incidence, labour productivity and firm seniority. Using Logit estimates we find that none of these factors can fully explain these differences. Moreover, the predicted negative relation between worker flows and unemployment duration does not seem to hold in the case of Italy.

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Article provided by Società editrice il Mulino in its journal Economia politica.

Volume (Year): (2006)
Issue (Month): 3 ()
Pages: 453-474

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Handle: RePEc:mul:jb33yl:doi:10.1428/23535:y:2006:i:3:p:453-474
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  1. Bertola, Giuseppe, 2002. "A Pure Theory of Job Security and Labour Income Risk," CEPR Discussion Papers 3430, C.E.P.R. Discussion Papers.
  2. Blanchard, Olivier & Wolfers, Justin, 2000. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," Economic Journal, Royal Economic Society, vol. 110(462), pages C1-33, March.
  3. Garibaldi, Pietro & Pacelli, Lia, 2004. "Do Larger Severance Payments Increase Individual Job Duration?," CEPR Discussion Papers 4607, C.E.P.R. Discussion Papers.
  4. 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.
  5. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, June.
  6. Boeri, Tito, 1996. "Is Job Turnover Countercyclical?," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 603-25, October.
  7. Ichino, Andrea & Polo, Michele & Rettore, Enrico, 2001. "Are Judges Biased by Labour Market Conditions? The Selection of Firing Litigations for Trial in an Italian Firm," CEPR Discussion Papers 2804, C.E.P.R. Discussion Papers.
  8. Paolo Naticchioni & Emiliano Rustichelli & Antonio Scialà, 2003. "Employment protection and regional worker flows in Italy: an assessment of the theoretical predictions," Working Papers - Dipartimento di Economia 1-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2003.
  9. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
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