Paper #722

Título:

Effects of employment protection and product market regulations on the Italian labor market

Autores:

Adriana Kugler y Giovanni Pica

Fecha:

Noviembre 2003

Resumen:

Labor market regulations have often being blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. More recently, attention has turned to the impact of product market regulations on employment growth. This paper analyzes how labor and product market regulations interact to affect turnover and employment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employer-employee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the increase in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.

Palabras clave:

Barriers to entry, costs of unjust dismissals, European Unemployment

Códigos JEL:

E24, J63, J65, L11, L43

Área de investigación:

Economía Laboral, Pública, de Desarrollo y de la Salud

Publicado en:

Julian Messina, Claudio Michelacci, Jarkko Turunen, and Gylfi Zoega, eds. Edward Elgar, 2005
Con el título:
Labour Market Adjustments in Europe

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