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Courts' ineffciency and irregular workers:identifying the impact of real EPL

Author

Listed:
  • Giuseppina Gianfreda

    () (Università della Tuscia)

  • Giovanna Vallanti

    () (Università Luiss "Guido Carli")

Abstract

The employment protection legislation is not enforced uniformly both across and within countries. Among the others, the enforcement of regulation depends on the courts' actions and on the capacity of firms to escape legislation. We exploit the variation in courts' inefficiency across Italian judicial districts in order to provide evidence on the impact of EPL on job reallocation and firms' productivity. We show that the inefficiency of the judicial system has a causal effect on job fows by reducing both job creation and job destruction with a detrimental impact on firms' labour productivity. Moreover, we find that the negative impact of firing costs on job turnover and pro- ductivity is weaker in regions with a large share of irregular workers, since firms can partially adjust their labour force through the informal channel.

Suggested Citation

  • Giuseppina Gianfreda & Giovanna Vallanti, 2013. "Courts' ineffciency and irregular workers:identifying the impact of real EPL," Working Papers LuissLab 13104, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  • Handle: RePEc:lui:lleewp:13104
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    References listed on IDEAS

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    12. Fraisse, H. & Kramarz, F. & Prost, C., 2009. "Labor Court Inputs, Judicial Cases Outcomes and Labor Flows: Identifying Real EPL," Working papers 256, Banque de France.
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    Citations

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    Cited by:

    1. Castro Massimo Finocchiaro & Guccio Calogero, 2015. "Bottlenecks or Inefficiency? An Assessment of First Instance Italian Courts’ Performance," Review of Law & Economics, De Gruyter, vol. 11(2), pages 317-354, July.
    2. Gianluca Esposito & Sergi Lanau & Sebastiaan Pompe, 2014. "Judicial System Reform in Italy - A Key to Growth," IMF Working Papers 14/32, International Monetary Fund.
    3. Sebastiaan Pompe & Wolfgang Bergthaler, 2015. "Reforming the Legal and Institutional Framework for the Enforcement of Civil and Commercial Claims in Portugal," IMF Working Papers 15/279, International Monetary Fund.

    More about this item

    Keywords

    EPL; courts; irregular workers; job flows; labour productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law
    • K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process

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