Shirking and Employment Protection Legislation: Evidence from a Natural Experiment

Vincenzo Scoppa ()

MPRA Paper from University Library of Munich, Germany

Abstract: In 1990 a reform in Italy has modified the employment protection legislation for employees of small firms (with fewer than 16 employees) making much more costly for firms to dismiss workers, while leaving unchanged the employment protection in large firms. Using a sample of administrative data (WHIP) from National Institute of Social Security we compare absenteeism rates (used as a proxy of shirking) in small and in large firms in the years just before (1989) and after (1991) the reform, with a difference-in-differences estimator. In line with theoretical predictions, we find a strong increase (around 18%) in shirking of workers employed in small firms after the increase in dismissal costs. This finding is robust to alternative definitions of small firm and to different time periods.

Keywords: Absenteeism; Shirking; Employment Protection Legislation; Difference-in-differences. (search for similar items in EconPapers)
JEL-codes: J41 J50 M51 (search for similar items in EconPapers)
Date: 2008-10-31
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Citations: View citations in EconPapers (2)

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Related works:
Journal Article: Shirking and employment protection legislation: Evidence from a natural experiment (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:16694

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