Effects of Employment Protection and Product Market Regulations on the Italian Labor Market

Adriana Kugler and Giovanni Pica

No 948, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: Labor market regulations have often been blamed for high and persistent unemployment in Europe, but evidence on their impact remains mixed. More recently, attention has turned to the impact of product market regulations on employment growth. This paper analyzes how labor and product market regulations interact to affect turnover and employment. We present a matching model which illustrates how barriers to entry in the product market mitigate the impact of labor market deregulation. We, then, use the Italian Social Security employeremployee panel to study the interaction between barriers to entry and dismissal costs. We exploit the fact that costs for unjust dismissals in Italy increased for firms below 15 employees relative to bigger firms after 1990. We find that the increase in dismissal costs after 1990 decreased accessions and separations in small relative to big firms, especially for women. Moreover, consistent with our model, we find evidence that the increase in dismissal costs had smaller effects on turnover for women in sectors faced with strict product market regulations.

Keywords: European unemployment; costs of unjust dismissals; barriers to entry (search for similar items in EconPapers)
JEL-codes: E24 J63 J65 L11 L43 (search for similar items in EconPapers)
Pages: 37 pages
Date: 2003-12
New Economics Papers: this item is included in nep-eec, nep-lab and nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (29)

Published - published in: J. Messina, C. Michelacci, J. Turunen and G. Zoega (eds.), Labour Market Adjustments in Europe, Edward Elgar 2006

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Related works:
Chapter: The Effects of Employment Protection and Product Market Regulations on the Italian Labour Market (2006)
Working Paper: Effects of Employment Protection and Product Market Regulations on the Italian Labour Market (2004)
Working Paper: The Effects of Employment Protection and Product Market Regulations on the Italian Labor Market (2003)
Working Paper: Effects of employment protection and product market regulations on the Italian labor market (2003)
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