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Are Judges Biased by Labour Market Conditions? The Selection of Firing Litigations for Trial in an Italian Firm

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  • Ichino, Andrea
  • Polo, Michele
  • Rettore, Enrico

Abstract

When a firing litigation is taken to court, only the characteristics of the employees’ misconduct should be relevant for the judge’s decision. Using data from an Italian bank this Paper shows that, instead, local labour market conditions influence the court’s decision: the same misconduct episode may be considered sufficient for firing in a tight labour market but insufficient otherwise. This finding is obtained after taking carefully into consideration the non-random selection of firing litigation for trial. The existence of a judge’s bias is relevant for at least two research fields. For macroeconomists it suggests that higher unemployment rates may increase firing costs via the effect on courts’ decision criteria; thus, the real extent of firing rigidities cannot be assessed without considering the role of courts. For labour law scholars, this finding is important because, following traditional principles, the law should be applied in the same way for all citizens and over the entire national territory.

Suggested Citation

  • 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.
  • Handle: RePEc:cpr:ceprdp:2804
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    Citations

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    Cited by:

    1. Naticchioni Paolo & Rustichelli Emiliano & Scialà Antonio, 2006. "Employment Protection and Regional Worker Flows in Italy," Economia politica, Società editrice il Mulino, issue 3, pages 453-474.
    2. Wolfgang Ochel, 2002. "International Comparisons and Transfer of Labour Market Institutions," CESifo Working Paper Series 788, CESifo Group Munich.
    3. Wolfgang Ochel, 2004. "Lernen von anderen Ländern: Zum internationalen Vergleich und Transfer von Arbeitsmarktinstitutionen," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 5(2), pages 139-158, May.
    4. repec:ces:ifodic:v:2:y:2004:i:4:p:14567727 is not listed on IDEAS
    5. Fabiano Schivardi & Roberto Torrini, 2003. "Firm Size Distribution and EPL in Italy," William Davidson Institute Working Papers Series 2003-613, William Davidson Institute at the University of Michigan.

    More about this item

    Keywords

    Conflict Resolutions; Firing Costs; Internal Labour Relations;

    JEL classification:

    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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