Uncertainty and the politics of employment protection

This paper investigates the social preferences over labor market exibility, in a general equilibrium model of dynamic labor demand. We demonstrate that how the economy responds to productivity shocks depends on the power of labor to extract rents and on the status quo level of the firing cost. In particular, we show that when the firing cost is initially relatively low, a transition to a rigid labor market is favored by all the employed workers with idiosyncratic productivity below some threshold value. Conversely, when the status quo level of the firing cost is relatively high, the preservation of a rigid labor market is favored by the employed with intermediate productivity, whereas all other workers favor more exibility. A more volatile environment, and a lower rate of productivity growth, i.e., "bad times," increase the political support for more labor market rigidity only where labor appropriates of relatively large rents. The coming of better economic conditions not necessarily favors the demise of high firing costs in rigid high-rents economies, because "good times" cut down 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 relative persistence until the present day

How do employment contract reforms affect welfare? Theory and evidence

Short-term employment contracts have been deployed rapidly across the European Union (EU) in the past two decades. Characterized by a high degree of ?exibility, they were thought to be the solution to persistent labor market rigidities and high unemployment rates. The objective of this paper is to investigate both theoretically and empirically the effects of introducing short-term employment contracts to the labor market, and to draw conclusions regarding the change in welfare for different categories of people. Data from the Italian labor market show that workers hired on a short-term basis are mostly young, female, inexperienced, less educated, and poorly quali?ed. Short-term contracts, which are associated with lower wages, often come in sequences. Labor force participation has increased in particular among older workers. Such changes in labor force composition and transition patterns can be explained by a search model with workers heterogeneity and differentiated contracts. In steady state, a pooling equilibrium of less and more productive workers exists, when only permanent contracts are available. In the presence of short-term contracts, a separating equilibrium allocates less and more productive workers towards different career paths. Through model calibration it is possible to quantify the change in welfare for different categories of workers. Moreover, within a multi-state duration framework, the model is estimated with the Heckman and Singer non-parametric maximum likelihood (NPMLE) estimation procedure. One of the major ?ndings is that inexperienced workers are worse off after the reforms. However, after the accumulation of some work experience, they have the opportunity to compensate for their losses, if they are more productive. Less productive workers, even though provided with higher chances to work, are the ones paying the cost of higher turnover and lower wages

How much flexibility do we really need?

Short-term contracts have been deployed rapidly across Europe since the mid 90s. The objective of this paper is to investigate both theoretically and empirically the effects of short-term contracts on individual welfare. By comparing the economy pre and post-reforms, we study the evolution of frms' and workers' dynamics, we identify the determinants behind the frms' decision to hire short-term, and we quantify the change in welfare for different categories of workers. We find that more productive workers fare better, while junior and less productive workers pay the cost of higher turnover and lower wages, conforming the presence of a dual economy. The study of potential policy interventions allows us to conclude that the longer the short-term contracts, the better the labor market outcomes. In addition, the comparison of the models pre and post-reforms with an American-style economy with a unique exible contract, seems to suggest that exibility has positive effects on the labor market for junior workers, but not necessarily on the one for senior workers

The “emersion” effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy

We analyze how different policy interventions may incentive the transition of workers from the informal to the formal sector. We use Italian data over the period 1998-2008 to evaluate ex post whether the 2003 Italian labor market reform was able to reach the objective to reduce the share of shadow employment. Based on our empirical results, we develop an ex ante evaluation based on a search and matching model, á la Mortensen and Pissarides to determine the right combination of policy interventions which may be effective in generating a significant reduction in undeclared work together with an expansion of the formal sector. We find that in an economy where permanent and temporary contracts coexist, the combination of lower payroll taxes for permanent jobs and higher probability of being audited generates a compression of the informal sector, leaving unemployment unchanged. A similar result can be obtained through a reduction of the firing cost associated with permanent jobs, even though this causes temporary contracts to increase relatively more than permanent contracts

The Emersion Effect: an analysis on labor tax evasion in Italy

We analyze how different policy interventions may incentive emersion from unde-clared work. We use Italian data over the period 1998-2003 to investigate whether the 2003 Italian labor market reform was able to reach the objective to reduce the share of shadow economy. We develop a search and matching model, á la Mortensen, on the basis of our empirical investigation to determine the right mix of policy interventions which maybe effective in generating an emersion effect. Our preliminary findings show that differentiated forms of taxations and enforcement might create a good combination of incentives to achieve a significant reduction in undeclared work

How do employment contract reforms affect welfare? Theory and evidence

Short-term employment contracts have been deployed rapidly across the European Union (EU) in the past two decades. Characterized by a high degree of flexibility, they were thought to be the solution to persistent labor market rigidities and high unemployment rates. The objective of this paper is to investigate both theoretically and empirically the effects of introducing short-term employment contracts to the labor market, and to draw conclusions regarding the change in welfare for different categories of people. Data from the Italian labor market show that workers hired on a short-term basis are mostly young, female, inexperienced, less educated, and poorly qualified. Short-term contracts, which are associated with lower wages, often come in sequences. Labor force participation has increased in particular among older workers. Such changes in labor force composition and transition patterns can be explained by a search model with workers heterogeneity and differentiated contracts. In steady state, a pooling equilibrium of less and more productive workers exists, when only permanent contracts are available. In the presence of short-term contracts, a separating equilibrium allocates less and more productive workers towards different career paths. Through model calibration it is possible to quantify the change in welfare for different categories of workers. Moreover, within a multi-state duration framework, the model is estimated with the Heckman and Singer non-parametric maximum likelihood (NPMLE) estimation procedure. One of the major findings is that inexperienced workers are worse off after the reforms. However, after the accumulation of some work experience, they have the opportunity to compensate for their losses, if they are more productive. Less productive workers, even though provided with higher chances to work, are the ones paying the cost of higher turnover and lower wages.Labor Economics, Policy

Young people between education and the labour market during the COVID-19 pandemic in Italy

We analyse the distribution and the flows between different types of employment (self-employment, temporary, and permanent), unemployment, education, and other types of inactivity, with particular focus on the duration of the school-to-work transition (STWT). The aim is to assess the impact of the COVID-19 pandemic in Italy on the careers of individuals aged 15-34. We find that the pandemic worsened an already concerning situation of higher unemployment and inactivity rates and significantly longer STWT duration compared to other EU countries, particularly for females and residents in the South of Italy. In the midst of the pandemic, individuals aged 20-29 were less in (permanent and temporary) employment and more in the NLFET (Neither in the Labour Force nor in Education or Training) state, particularly females and non Italian citizens. We also provide evidence of an increased propensity to return to schooling, but most importantly of a substantial prolongation of the STWT duration towards permanent employment, mostly for males and non Italian citizens. Our contribution lies in providing a rigorous estimation and analysis of the impact of COVID-19 on the carriers of young individuals in Italy, which has not yet been explored in the literature.Comment: 16 pages, 4 figures, 3 table

Absence of Long Range Magnetic Order in the La1.4Sr0.8Ca0.8Mn2O7 Bilayered Manganite

In this work we studied, by means of high-resolution neutron diffraction as a function of temperature, the La1.4Sr0.8Ca0.8Mn2O7 bilayered manganite for two different annealing treatments. Out data allowed us to shown, for the first time, the absence of long-range magnetic order in this optimally doped bilayered manganite where the A-site of the structure is doped with equal proportions of different isovalent cations (Ca and Sr). The system, however, presents defined IM transitions which suggest that the transport properties are not linked to the evolution of long-range order and that two dimensional spin ordering in the layers of the perovskite blocks may be sufficient to 'assist' the hole hopping. Possible reason for the suppression of magnetic order induced by the Ca doping is a size effect coupled to the cation size mismatch between the Sr and Ca ions.Comment: 24 pages, 7 figure

Unexpected effect of Ru-substitution in lightly doped manganites

In this Communication we report about the unexpected effect of ruthenium doping in sodium ligthly-doped manganites. This effect seems to be in contrast with the usual model applied to describe the effect of this magnetic ion into the manganite structure. We propose a possible compensation mechanism which seems also able to describe other peculiar features encountered in these materials.Comment: 3 pages, 2 Figures to appear in ChemCom

Typical and atypical employment contracts: the case of Italy

Atypical work refers to employment relationships, which do not conform to the standard model of full-time job of unlimited duration with a single employer. They differ from the typical contract in terms of legal regulations as well as requirements and benefits the worker is entitled to. This paper presents a detailed description of the scope, the characteristics and the evolution of typical and atypical contracts in Italy. In addition, this paper provides a review of the main findings of empirical and theo- retical studies on atypical contracts to understand their effects on the Italian labour market