Do Larger Severance Payments Increase Individual Job Duration?

This paper analyzes the effect of severance payments on the probability of separation at given tenure, wages and other individual and firm characteristics. It studies a mandatory deferred wage scheme of the Italian labour market (Trattamento di Fine Rapporto, TFR). Deferred wages increase job duration if two conditions hold: wages are rigidly set outside the employer-employee relationship, and past provisions are accumulated at interest rates that are below market rates. Under such circumstances, workers who withdraw from their accumulated stock of unpaid wages should experience, at given tenure, a subsequent increase in the probability of separation. This prediction appears empirically robust and quantitatively sizeable. A withdrawal of 60% of the TFR stock 60% of the TFR stock (the median observed withdrawal) increases the instantaneous hazard rate by almost 20%. In other words, an individual with at least ten years of tenure that experiences an early withdrawal increases his/her hazard rate from 10% to about 12%. The empirical result takes into account the existence of unobserved heterogeneity and a variety of further robustness tests.labor markets, severance payments, wage schemes, job tenure, job separation.

Fixed Term Contracts, Social Security Rebates and Labour Demand in Italy

The availability of a flexible labour force might influence adjustment decisions regarding the rigid part of the labour force. To test this idea, we contrast the use of trainees (fixed-term contracts) and normal-contract workers (open-end contracts) when a reform made it more costly to use trainees. The results of our DID analysis indicate that the burden of adjustment shifts on trainees if they are present in the firm; if this buffer becomes less available, firms employing trainees see their average labour productivity decrease in the short run and their job destruction increase in the medium run. These effects seem to be increasing with firm size.fixed term contracts, difference in differences analysis, labour demand, job creation, firing costs.

Are Temporary Jobs a Port of Entry into Permanent Employment? Evidence from Matched Employer-Employee Data

Are temporary jobs a port of entry into permanent employment? In this paper we argue that the answer crucially depends on the type of temporary contracts being considered, as the different contracts observed in practice are typically characterized by varying combinations of training, tax-incentives and EPL provisions. We base our empirical evidence on a longitudinal sample of labour market entrants in Italy, a country where a large number of temporary contracts coexist with a relatively high employment protection for standard employees. We estimate dynamic multinomial logit models with fixed effects, to allow for non-random sorting of workers into the different types of contracts. We show that the transition to permanent employment is more likely for individuals holding any type of temporary contracts than for the unemployed, thus broadly confirming the existence of port-of-entry effects. Yet, not all temporary contracts are the same: training contracts are the best port of entry, while freelance contracts are the worst. We also show that temporary contracts are generally a port-of-entry into a permanent position within the same employer, but not across firms, implying that little general-purpose training is gained while on temporary jobs. Moreover, the time needed for an internal transformation from a temporary to a permanent position appears rather long, suggesting that firms are likely to use (a sequence of) temporary contracts as a cost-reduction strategy, rather than as a screening device for newly hired workers.temporary jobs, port of entry, matched employer-employee data, dynamic multinomial logit models, state dependence, fixed effects

What does the stork bring to women's working career?

Many studies have been devoted to analyse the effect of maternity on working mothers; they mostly refer to countries where female participation is high. Fewer studies consider Southern European countries. This paper aims at filling the gap analysing the effects of motherhood on women’s working career in Italy, a neat example of Southern European country where female participation is increasing but still low and where the decrease in trade unions’ power increased wage disparities. Our results show that conditional average wages of mothers become significantly lower than those of non-mothers after childbirth, showing no sign of a closing gap 5 years afterward. However, this penalty does not emerge for mothers moving to a part-time job; hence - differently from the existing literature - we highlight the potential role of part-time jobs in mitigating the "reduced effort" effect of childrearing. Furthermore, we estimate a significant increase in the probability of transition from employment to non-employment for new mothers. The probability is higher the lower the pre-childbirth wage. However, this penalty is reduced by the availability of part-time jobs in mothers’ relevant labour market. Hence again it emerges the potential role of part-time jobs in mitigating the negative effect of childbirth on women’s labour market participation. the support for flexibility among the least productive employed workers. The model described provides some new insights on the comparative dynamics of labor market institutions in the U.S. and in Europe over the last few decades, shedding some new light both on the reasons for the original build-up of "Eurosclerosis," and for its the persistence up to the present day.motherhood, part-time jobs, wage penalty, career.

What does the stork bring to women's working career?

Many studies have been devoted to analyse the effect of maternity on working mothers; they mostly refer to countries where female participation is high. Fewer studies consider Southern European countries. This paper aims at filling the gap analysing the effects of motherhood on women’s working career in Italy, a neat example of Southern European country where female participation is increasing but still low and where the decrease in trade unions’ power increased wage disparities. Our results show that conditional average wages of mothers become significantly lower than those of non-mothers after childbirth, showing no sign of a closing gap 5 years afterward. However, this penalty does not emerge for mothers moving to a part-time job; hence - differently from the existing literature - we highlight the potential role of part-time jobs in mitigating the "reduced effort" effect of childrearing. Furthermore, we estimate a significant increase in the probability of transition from employment to non-employment for new mothers. The probability is higher the lower the pre-childbirth wage. However, this penalty is reduced by the availability of part-time jobs in mothers’ relevant labour market. Hence again it emerges the potential role of part-time jobs in mitigating the negative effect of childbirth on women’s labour market participation. the support for flexibility among the least productive employed workers. The model described provides some new insights on the comparative dynamics of labor market institutions in the U.S. and in Europe over the last few decades, shedding some new light both on the reasons for the original build-up of "Eurosclerosis," and for its the persistence up to the present day.motherhood, part-time jobs, wage penalty, career.

Short Employment Spells in Italy, Germany and the UK: Testing the Port-of-Entry Hypothesis

This paper looks at short employment spells in three European countries: the UK, whose labour market is considered the most flexible in the EU; Italy, regarded as the least flexible; and Germany, tightly regulated, but characterised by a deservedly famous apprenticeship system. In particular, it aims to assess whether young people in short-lived jobs stand a better chance of finding a "good job" compared to their older colleagues. The increasingly held belief that - in modern economies - a "bad job" at the beginning of onÈs career is the "port-of-entry" to stable employment and to upward mobility, makes this assessment particularly relevant; i.e. it matters greatly if short-duration jobs are entry ports into better employment or become long term-traps. The lack of accepted benchmarks makes it difficult to reach strong conclusions in regard to the 'efficiency' of labour markets: cross-country comparisons help to highlight the effect of different labour market institutions on mobility and on the soundness of the "port-of-entry" hypothesis.

Temporary hires and innovative investments

The flexicurity approach claims a positive effect of flexible labour on firm performance, also through an increased ability to innovate. Critics consider it a deregulation of the labour market, decreasing investment in human capital and innovation. We contribute to this broad debate providing an estimate of the relationships linking innovative investment, substitution investment, permanent hires and temporary hires. In particular, we aim at affirming or denying that innovative investments are accompanied by a specific kind of workforce, being it stable or flexible. In doing so, we contribute to bridge the gap among two quite separate strands of literature, as existing literature usually analyses capital and labour separately. Estimating a non linear recursive equation system we highlight a significant increase in the likelihood of hiring on a permanent base when the firm innovates; this holds till 2008. Afterward, during the crisis, innovating firms are more likely to hire using temporary contracts instead, a possible signal of a cost saving strategy adopted in a loose labour market. Furthermore, both permanent and temporary hires never depend on increases in labour costs; however, substitution investment increases when labour cost increases, maybe in an attempt to increase labour productivity through a more efficient capital equipment.EPL, investment, innovation, flexicurity, survey data

Temporary jobs: Port of entry, Trap, or just Unobserved Heterogeneity?

We use a 1998 - 2004 sample from WHIP in order to study the labor market transitions of young entrants. We consider seven labor market tates: permanent and temporary employment, apprenticeship, training pogrammes, self employment, quasi subordinate jobs and unemployment. After controlling for individual ?xed e¤ects in a dynamic multinomial logit framework, we ?nd that heterogeneity partially explains workers' sorting among the contracts. State dependence exists in all the labor market states, but CFLs, apprenticeship and temporary jobs also represent a port of entry towards permanent employment. Length: 22 pagestemporary jobs, port of entry, state dependence

What Does the Stork Bring to Women’s Working Career?

We analyse the effects of motherhood on women’s working career using WHIP, a database that records individual work histories together with childbearing events. We investigate two main issues: the career penalty and the wage penalty (better known in the literature as family wage gap). We focus on a group of women (i) highly attached to the labour market before maternity, and (ii) that have only one child. Hence, we search for penalties among those who are less likely to experience them, providing a lower bound of the average penalty in the whole population. With respect to the former penalty, we focus on selection of women out of employment after childbirth and we find a significant increase in the probability of transition from employment to non-employment for new mothers. Moreover part time mothers are less likely to exit, pointing to part time as a family-friendly contract. With respect to wages, we restrict the analysis to continuously working women and analyse their wage profiles following a difference in differences approach. We find that conditional average wage of future mothers is significantly higher than that of non mothers before childbearing and it becomes significantly lower afterward, showing no sign of a closing gap after 4 years.motherhood, employment transitions, wage penalty, career.