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Employment protection and regional worker flows in Italy

  • Naticchioni, Paolo
  • Rustichelli, Emiliano
  • Scialà, Antonio

In this paper we point out that the theoretical predictions concern-ing Employment Protection Legislation (EPL) are not fully confirmed by empirical evidence in Italy, a strict EPL country in the nine-ties, according to OECD indexes. In particular, worker and job flow rates are remarkably high, also in comparison with the other Euro-pean countries. Furthermore, the differences in regional worker flow rates -computed on both the social security database and the LFS- are relevant, no matter which measure of worker flows is considered. While EPL is the same across regions, the highest worker flow rates are observed in the South, an area generally recognised as the least dynamic of the country, followed by the Northeast, the Centre and the Northwest. For possible alternative explanations of regional differences investigation focuses on economic structural composi-tion, the black labour market, non-standard contracts, the public sector and self-employment incidence, labour productivity and firm seniority. Using Logit estimates we find that none of these factors can fully explain these differences. Moreover, the predicted nega-tive relation between worker flows and unemployment duration does not seem to hold in the case of Italy.

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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1690.

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Date of creation: Oct 2006
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Handle: RePEc:pra:mprapa:1690
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  1. Garibaldi, Pietro & Pacelli, Lia, 2004. "Do Larger Severance Payments Increase Individual Job Duration?," CEPR Discussion Papers 4607, C.E.P.R. Discussion Papers.
  2. Paolo Naticchioni & Emiliano Rustichelli & Antonio Scialà, 2003. "Employment protection and regional worker flows in Italy: an assessment of the theoretical predictions," Working Papers - Dipartimento di Economia 1-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2003.
  3. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
  4. Boeri, Tito, 1996. "Is Job Turnover Countercyclical?," Journal of Labor Economics, University of Chicago Press, vol. 14(4), pages 603-25, October.
  5. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  6. Bertola, Giuseppe, 2002. "A Pure Theory of Job Security and Labour Income Risk," CEPR Discussion Papers 3430, C.E.P.R. Discussion Papers.
  7. Pierre Cahuc & André Zylberberg, 2004. "Labor Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 026203316x, June.
  8. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  9. 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.
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