Employment Protection and Worker Flows in Italy: Testing the Theoretical Predictions

Abstract

In this paper we point out that the theoretical predictions concerning EPL are not fully confirmed by empirical data in Italy. In particular worker flows are remarkably high (among the highest of continental Europe), independently of which measure of worker flows is considered (Gwt, Gwr or Employment outflows). Moreover, we argue that geographical differences among regions are quite surprising. Even if EPL is the same across regions, workers flows are higher in the South than in the North, even after controlling for firm size and sectoral composition effects. We have also derived a clear positive relation between worker flows and unemployment duration, contrary to what predicted by the theory. Another interesting point is that empirical evidences confirm Blanchard & Portugal’s results: EPL effects concerns in particular worker movements on high frequency data (i.e. quarter-to-quarter more than yearly-to-yearly). Finally, some welfare considerations are derived. Université Catholique de Louvain, IRES and Università di Roma “La Sapienza”, Dipartimento di Scienze Economiche. ♦ ISFOL, Area Mercato del Lavoro. ♠ Università di Roma “La Sapienza”, Dipartimento di Scienze Economiche. *This paper is the result of a research partnership between ISFOL Area Mercato del Lavoro (Rome) and Dipartimento di Scienze Economiche – University “La Sapienza” of Rome. We are very grateful to Sergio Bruno, Carlo De Gregorio, Marinella Giovine and Paolo Piacentini for their valuable suggestions. Usual disclaimer applies. Even if contents of this work have been jointly discussed and elaborated section 1 is to be attributed to A. Scialà, section 2 to E. Rustichelli and section 3 to P. Naticchioni.

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Cite this paper

@inproceedings{Naticchioni2002EmploymentPA, title={Employment Protection and Worker Flows in Italy: Testing the Theoretical Predictions}, author={Paolo Naticchioni and Emiliano Rustichelli and Antonio Scial{\`a} and Sergio Bruno and Carlo De Gregorio and Marinella Giovine}, year={2002} }