Employment protection and fertility decisions: the unintended consequences of the Italian Jobs Act

Wrongful discharge laws and innovation

Maria De Paola (), Roberto Nisticò () and Vincenzo Scoppa ()

Economic Policy, 2021, vol. 36, issue 108, 735-773

Abstract: SUMMARYWe study the effect of a reduction in employment protection on workers’ fertility decisions. Using data from the Italian Labor Force Survey for 2013–18, we analyse how the propensity to have a child has been affected by the 2015 labour market reform dubbed the ‘Jobs Act’, which reduced employment protection for employees of larger firms while leaving small firms essentially untouched. We take a Difference-in-Differences identification approach and compare the change in fertility decisions of women employed in large firms with that of women in small firms. We find that the former’s probability of having a child is 1.4 percentage points lower. A battery of robustness checks confirms this finding. The effect also holds when possible sorting issues are accounted for by an instrumental variable approach. We document substantial heterogeneous effects by age, marital status, parity and geographical area as well as by education and earnings. Our findings suggest the potential unintended consequences on fertility that labour market reforms introducing greater flexibility may have by heightening career insecurity.

JEL-codes: C31 J13 J41 J65 M51 (search for similar items in EconPapers)
Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:oup:ecpoli:v:36:y:2021:i:108:p:735-773.

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