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Absenteeism, Unemployment And Employment Protection Legislation: Evidence From Italy

  • Vincenzo Scoppa

    ()

  • Daniela Vuri

    ()

    (Dipartimento di Economia e Statistica, Università della Calabria)

Efficiency wages theories argue that the threat of firing, coupled with a high unemployment rate, is a mechanism that discourages employee shirking in asymmetric information contexts. Our empirical analysis aims to verify the role of unemployment as a worker discipline device, considering the different degree of job security offred by the Italian Employment Protection Legislation to workers employed in small and large firms. We use a panel of administrative data (WHIP) and consider sickness absences as an empirical proxy for employee shirking. Controlling for a number of individual and firm characteristics, we investigate the relationship between worker's absences and local unemployment rate (at the provincial level). We find a strong negative impact of unemployment on absenteeism rate, which is considerable larger in small firms due to a significantly lower protection from dismissals in these firms. We also find that workers who are absent more frequently face higher risks of dismissal. As an indirect test of the role of unemployment as worker's discipline device we show that public sector employees, almost impossible to fire, do not react to the local unemployment.

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File URL: http://www.ecostat.unical.it/RePEc/WorkingPapers/WP08_2012.pdf
File Function: First version, 2012-12
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Paper provided by Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica) in its series Working Papers with number 201208.

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Length: 35 pages
Date of creation: Dec 2012
Date of revision:
Handle: RePEc:clb:wpaper:201208
Contact details of provider: Postal: Università della Calabria, Dipartimento di Economia, Statistica e Finanza, Ponte Pietro Bucci, Cubo 0/C, I-87036 Arcavacata di Rende, CS, Italy
Phone: +39 0984 492413
Fax: +39 0984 492421
Web page: http://www.unical.it/portale/strutture/dipartimenti_240/disesf/

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  23. Faini, Riccardo & Galli, Giampaolo & Gennari, Pietro & Rossi, Fulvio, 1997. "An empirical puzzle: Falling migration and growing unemployment differentials among Italian regions," European Economic Review, Elsevier, vol. 41(3-5), pages 571-579, April.
  24. Hesselius, Patrik, 2007. "Does sickness absence increase the risk of unemployment?," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 36(2), pages 288-310, April.
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