IDEAS home Printed from https://ideas.repec.org/a/oup/ecpoli/v33y2018i93p101-130..html
   My bibliography  Save this article

Firing costs and firm hiring: evidence from an Italian reform

Author

Listed:
  • Paolo Sestito
  • Eliana Viviano

Abstract

Aimed at reducing labour market dualism and favouring job creation, in 2015 the Italian government issued new regulations lowering firing costs for newly signed open-ended job contracts. To foster the adoption of the new rules the government introduced also a generous subsidy for firms hiring workers with an open-ended contract. Using microdata on hiring and firing for one Italian region, Veneto, we exploit some differences in the design of the two policies to separately identify the effects of new firing costs on firm hiring. We find that around 8% of gross permanent hires occurred because of the reduction of firing costs (in addition to the positive and large effect of the hiring subsidies). The reform of firing costs contributed also to increase the monthly rate of conversion of fixed-term jobs into permanent positions. As suggested by the theory, we also find that the new firing rules made firms slightly less reluctant to offer permanent job positions to yet untested workers.

Suggested Citation

  • Paolo Sestito & Eliana Viviano, 2018. "Firing costs and firm hiring: evidence from an Italian reform," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(93), pages 101-130.
  • Handle: RePEc:oup:ecpoli:v:33:y:2018:i:93:p:101-130.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/epolic/eix018
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    Keywords

    trade; Brexit; general equilibrium;
    All these keywords.

    JEL classification:

    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • K31 - Law and Economics - - Other Substantive Areas of Law - - - Labor Law

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:oup:ecpoli:v:33:y:2018:i:93:p:101-130.. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Oxford University Press (email available below). General contact details of provider: https://edirc.repec.org/data/cebruuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.