Does Weaker Employment Protection Lower the Cost of Job Loss?

Marco Francesconi and Daniela Sonedda

No 17374, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Leveraging a major Italian reform enacted in June 2012 that eroded employment protection to workers on permanent contracts, we use detailed administrative data to estimate how this reduction affected the cost of job loss. We employ a stacked-by-event research design, which compares workers moving into nonemployment before and after the reform. Weakening employment protection led to additional penalties in terms of lower re-hiring earnings and lower re-employment probabilities. Heterogeneous effects of the reform deepened pre-existing divides, penalizing more, among others, young workers and workers living in the South.

Keywords: layoffs; employment protection; dual labor markets; difference-in-differences; Italy (search for similar items in EconPapers)
JEL-codes: J30 J41 J63 J65 J68 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2024-10
New Economics Papers: this item is included in nep-eur and nep-lab
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Working Paper: Does Weaker Employment Protection Lower the Cost of Job Loss? (2024)
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