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Employment Protection and Fertility: Evidence from the 1990 Italian Reform

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Abstract

The aim of this paper is to investigate the effect of Employment Protection Legislation (EPL) on fertility decisions of Italian working women using administrative data. We exploit a reform that introduced in 1990 costs for dismissals unmotivated by a 'fair cause' or 'justified motive' in firms below 15 employees and left firing costs unchanged for bigger firms. We use this quasi-experimental setup to study the hypothesis that increased EPL reduces future job insecurity and positively affects a female worker's proneness to take childbearing decisions. We use a difference in difference (OLS-DID) model to control for possible period-invariant sorting bias and an instrumental variable (IV-DID) model to account for time-varying endogeneity of the treatment status. We find that reduced economic insecurity following a strengthening of the EPL regime has a positive and sizable effect on fertility decisions of Italian working women. This result is robust to a number of checks regarding possible interactions with other policy reforms occurring around 1990, changes in the sample of workers and firms, and use of an alternative set of exclusion restrictions.

Suggested Citation

  • Ervin Prifti & Daniela Vuri, 2012. "Employment Protection and Fertility: Evidence from the 1990 Italian Reform," CEIS Research Paper 236, Tor Vergata University, CEIS, revised 15 Apr 2013.
  • Handle: RePEc:rtv:ceisrp:236
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    1. Anche il Jobs act influenza le scelte di maternità
      by Maria De Paola, Roberto Nisticò e Vincenzo Scoppa in La Voce on 2020-06-02 09:03:44

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    Cited by:

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    3. Paolo Emilio Mistrulli & Tommaso Oliviero & Zeno Rotondi & Alberto Zazzaro, 2023. "Job Protection and Mortgage Conditions: Evidence from Italian Administrative Data," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 85(6), pages 1211-1237, December.
    4. Marco Leonardi & Giovanni Pica, 2013. "Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation," Economic Journal, Royal Economic Society, vol. 123(12), pages 1236-1278, December.
    5. Ervin Prifti & Silvio Daidone & Greta Campora & Noemi Pace, 2021. "Government Transfers and Time Allocation Decisions: The Case of Child Labour in Ethiopia," Journal of International Development, John Wiley & Sons, Ltd., vol. 33(1), pages 16-40, January.
    6. Adrián Nieto, 2018. "Permanent employment and fertility: The importance of job security and the career costs of childbearing," Discussion Papers 2018/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
    7. Landaud, Fanny, 2021. "From employment to engagement? Stable jobs, temporary jobs, and cohabiting relationships," Labour Economics, Elsevier, vol. 73(C).
    8. Nieto, Adrián, 2022. "Can subsidies to permanent employment change fertility decisions?," Labour Economics, Elsevier, vol. 78(C).
    9. Maria De Paola & Roberto Nisticò & Vincenzo Scoppa, 2020. "Fertility Decisions And Employment Protection: The Unintended Consequences Of The Italian Jobs Act," Working Papers 202003, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    10. Jörn H. Block & Christian O. Fisch & James Lau & Martin Obschonka & André Presse, 2019. "How Do Labor Market Institutions Influence the Preference to Work in Family Firms? A Multilevel Analysis Across 40 Countries," Entrepreneurship Theory and Practice, , vol. 43(6), pages 1067-1093, November.
    11. Gianluca Cerruti & Gianluca Mazzarella & Mauro Migliavacca, 2023. "Employment protection legislation and household formation: evidence from Italy," Review of Economics of the Household, Springer, vol. 21(3), pages 913-939, September.
    12. Pieroni, Luca & d’Agostino, Giorgio & Lanari, Donatella & Scarlato, Margherita, 2023. "Temporary employment and fertility in Italy: The effect of two labor market reforms in the early 2000s," Economic Modelling, Elsevier, vol. 124(C).
    13. Zhao, Yuejun, 2023. "Job displacement and the mental health of households: Burden sharing counteracts spillover," Labour Economics, Elsevier, vol. 81(C).
    14. Elena Bastianelli & Raffaele Guetto & Daniele Vignoli, 2023. "Employment Protection Legislation, Labour Market Dualism, and Fertility in Europe," European Journal of Population, Springer;European Association for Population Studies, vol. 39(1), pages 1-27, December.
    15. Susanne Fahlén & Livia Sz. Oláh, 2018. "Economic uncertainty and first-birth intentions in Europe," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 39(28), pages 795-834.
    16. Chiara L. Comolli & Daniele Vignoli, 2019. "Spread-ing uncertainty, shrinking birth rates," Econometrics Working Papers Archive 2019_08, Universita' degli Studi di Firenze, Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti".
    17. Nkechi S. Owoo & Monica P. Lambon-Quayefio, 2022. "Does Job Security Affect Fertility and Fertility Intentions in Ghana? Examining the Evidence," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 86-99, March.
    18. Carta, Francesca & Casarico, Alessandra & De Philippis, Marta & Lattanzio, Salvatore, 2024. "Mom's Out: Employment after Childbirth and Firm-Level Responses," IZA Discussion Papers 16908, Institute of Labor Economics (IZA).
    19. Piotr Lewandowski & Iga Magda & Jan Baran & Olena Fedyuk & Attila Bartha, 2013. "Gender Dimensions of the Labour Markets over the Past Two Decades," IBS Working Papers 1/2013, Instytut Badan Strukturalnych.
    20. Awaworyi Churchill, Sefa & Smyth, Russell & Trinh, Trong-Anh & Yew, Siew Ling, 2022. "Local crime and fertility," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 312-331.

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    More about this item

    Keywords

    Fertility; Employment protection; Difference-in-difference; Instrumental variables; Policy evaluations.;
    All these keywords.

    JEL classification:

    • J2 - Labor and Demographic Economics - - Demand and Supply of Labor
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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