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The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation

  • Ichino, Andrea
  • Riphahn, Regina

Employment protection systems are known to generate significant distortions in firms’ hiring and firing decisions. We know much less about the impact of these regulations on workers behaviour. The goal of this Paper is to fill in this gap and in particular to assess whether the provision of employment protection induces more absenteeism among workers. Our analysis is based on weekly observations for the 858 white-collar workers hired by a large Italian bank between January 1993 and February 1995. These workers begin to be protected against firing only after the twelfth week of tenure and we observe them for one year. We show that the number of day’s absence per week more than doubles once employment protection is granted. This result offers a preliminary but robust piece of evidence to evaluate a consequence of employment protection systems that has been relatively neglected in the policy debate in Europe.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3847.

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Date of creation: Mar 2003
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Handle: RePEc:cpr:ceprdp:3847
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  1. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer, vol. 6(3), pages 389-410, August.
  2. Bertola, Giuseppe, 1990. "Job security, employment and wages," European Economic Review, Elsevier, vol. 34(4), pages 851-879, June.
  3. Regina T. Riphahn & Anja Thalmaier, 2001. "Behavioral Effects of Probation Periods: An Analysis of Worker Absenteeism," Journal of Economics and Statistics (Jahrbuecher fuer Nationaloekonomie und Statistik), Justus-Liebig University Giessen, Department of Statistics and Economics, vol. 221(2), pages 179-201.
  4. Hopenhayn, Hugo & Rogerson, Richard, 1993. "Job Turnover and Policy Evaluation: A General Equilibrium Analysis," Journal of Political Economy, University of Chicago Press, vol. 101(5), pages 915-38, October.
  5. Barmby, Tim & Stephan, Gesine, 2000. "Worker Absenteeism: Why Firm Size May Matter," Manchester School, University of Manchester, vol. 68(5), pages 568-77, September.
  6. Andrea Ichino & Giovanni Maggi, 2000. "Work Environment And Individual Background: Explaining Regional Shirking Differentials In A Large Italian Firm," The Quarterly Journal of Economics, MIT Press, vol. 115(3), pages 1057-1090, August.
  7. Shapiro, Carl & Stiglitz, Joseph E, 1984. "Equilibrium Unemployment as a Worker Discipline Device," American Economic Review, American Economic Association, vol. 74(3), pages 433-44, June.
  8. P Garibaldi, 1995. "Job Flow Dynamics and Firing Restrictions," CEP Discussion Papers dp0256, Centre for Economic Performance, LSE.
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