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Employment Protection, Workforce Mix and Firm Performance

Author

Listed:
  • Ardito, Chiara

    (University of Turin)

  • Berton, Fabio

    (European Commission Joint Research Centre (JRC))

  • Pacelli, Lia

    (University of Turin)

  • Passerini, Filippo

    (Catholic University Milan)

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, 2021. "Employment Protection, Workforce Mix and Firm Performance," IZA Discussion Papers 14613, IZA Network @ LISER.
    • Handle: RePEc:iza:izadps:dp14613
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    Cited by:

    1. Bottasso, Anna & Bratti, Massimiliano & Cardullo, Gabriele & Conti, Maurizio & Sulis, Giovanni, 2025. "Labor market regulations and firm adjustments in skill demand," Journal of Public Economics, Elsevier, vol. 242(C).
    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. 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.

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    Keywords

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    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

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