Employment protection legislation and wages

In a perfect labor market severance payments can have no real effects as they can be undone by a properly designed labor contract (Lazear 1990). We give empirical content to this proposition by estimating the effects of EPL on entry wages and on the tenure-wage profile in a quasi-experimental setting. We consider a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees, leaving firing costs unchanged for bigger firms. Estimates which account for the endogeneity of the treatment status due to workers and firms sorting around the 15 employees threshold show no effect of the reform on entry wages and a decrease of the returns to tenure by around 20% in the first year and by 8% over the first two years. We interpret these findings as broadly consistent with Lazear’s (1990) prediction that firms make workers prepay the severance cost. JEL Classification: E24, J63, J65Costs of Unjust Dismissals, Regression Discontinuity Design, Severance Payments

Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation

This paper estimates the effect of employment protection legislation (EPL) on workers' individual wages in a quasi-experimental setting, exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees and left firing costs unchanged for bigger firms. Accounting for the endogeneity of the treatment status, we find that the slight average wage reduction (between –0.4 and –0.1 percent) that follows the increase in EPL hides highly heterogeneous effects. Workers who change firm during the reform period suffer a drop in the entry wage, while incumbent workers are left unaffected. Results also indicate that the negative wage effect of the EPL reform is stronger on young blue collars and on workers at the low-end of the wage distribution. Finally, workers in low-employment regions suffer higher wage reductions after the reform. This pattern suggests that the ability of the employers to shift EPL costs onto wages depends on workers' and firms' relative bargaining power.Costs of Unjust Dismissals, Severance Payments, Policy Evaluation, Endogeneity of Treatment Status

Who Pays for It? The Heterogeneous Wage Effects of Employment Protection Legislation

Theory predicts that the wage effects of government-mandated severance payments depend on workers' and firms' relative bargaining power. This paper estimates the effect of employment protection legislation (EPL) on workers' individual wages in a quasi-experimental setting, exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees and left firing costs unchanged for bigger firms. Accounting for the endogeneity of the treatment status, we find that high-bargaining power workers (stayers, white collar and workers above 45) are almost left unaffected by the increase in EPL, while low-bargaining power workers (movers, blue collar and young workers) suffer a drop both in the wage level and its growth rate.costs of unjust dismissals, severance payments, policy evaluation, endogeneity of treatment status

A large deviation approach to super-critical bootstrap percolation on the random graph Gn,pG_{n,p}

We consider the Erd\"{o}s--R\'{e}nyi random graph $G_{n,p}$ and we analyze the simple irreversible epidemic process on the graph, known in the literature as bootstrap percolation. We give a quantitative version of some results by Janson et al. (2012), providing a fine asymptotic analysis of the final size $A_n^*$ of active nodes, under a suitable super-critical regime. More specifically, we establish large deviation principles for the sequence of random variables $\{\frac{n- A_n^*}{f(n)}\}_{n\geq 1}$ with explicit rate functions and allowing the scaling function $f$ to vary in the widest possible range.Comment: 44 page

Implicit Coordination of Caches in Small Cell Networks under Unknown Popularity Profiles

We focus on a dense cellular network, in which a limited-size cache is available at every Base Station (BS). In order to optimize the overall performance of the system in such scenario, where a significant fraction of the users is covered by several BSs, a tight coordination among nearby caches is needed. To this end, this pape introduces a class of simple and fully distributed caching policies, which require neither direct communication among BSs, nor a priori knowledge of content popularity. Furthermore, we propose a novel approximate analytical methodology to assess the performance of interacting caches under such policies. Our approach builds upon the well known characteristic time approximation and provides predictions that are surprisingly accurate (hardly distinguishable from the simulations) in most of the scenarios. Both synthetic and trace-driven results show that the our caching policies achieve excellent performance (in some cases provably optimal). They outperform state-of-the-art dynamic policies for interacting caches, and, in some cases, also the greedy content placement, which is known to be the best performing polynomial algorithm under static and perfectly-known content popularity profiles