Employment Protection, Job Insecurity, and Job Mobility

Marco Bertoni, Simone Chinetti and Roberto Nisticò ()

CSEF Working Papers from Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy

Abstract: This study leverages the Italian Jobs Act reform as a natural experiment to examine the impact of reduced employment protection on job insecurity and job mobility. The reform significantly lowered protection for open-ended contract workers in large firms hired after March 7, 2015, and introduced a sharp discontinuity in severance pay at 2-year tenure. Treated employees exhibit increased fear of job loss and higher termination rates. The higher job insecurity prompts workers in low-pay sectors and in low-quality firms to actively pursue job mobility, transitioning towards higher-paying positions. Conversely, workers in high-paying sectors respond by intensifying their efforts to secure their existing jobs. Crucially, all effects disappear for workers above the 2-year tenure threshold, when they become entitled to a 50% higher severance pay. These findings emphasize a complex trade-off behind the design of employment protection systems, as addressing early-stage insecurity with tailored social insurance may counteract upward mobility effects.

Keywords: employment protection; job insecurity; job mobility; on-the-job search. (search for similar items in EconPapers)
JEL-codes: J22 J28 J41 J65 (search for similar items in EconPapers)
Date: 2023-10-13
New Economics Papers: this item is included in nep-eur, nep-hrm and nep-lma
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Related works:
Working Paper: Employment Protection, Job Insecurity, and Job Mobility (2023)
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Persistent link: https://EconPapers.repec.org/RePEc:sef:csefwp:684

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