1,721,096 research outputs found
A tale of comprehensive labor market reforms: evidence from the Italian jobs act
No full textThe Italian Jobs Act introduced a subsidy for new hirings as well as a new open ended labor contract based on graded security, with severance payments increasing with tenure, while phasing out the compulsory reinstatement of workers in the case of unfair dismissals applied until March 2015. Simple models of job creation and destruction predict that hiring subsidies and lower firing costs unambiguously increase hirings. Moreover, lower firing costs associated with graded security should also increase layoffs. These effects need not to be uniform across the size distribution of firms, especially when firms of different size are treated differently by the policy changes as in the case of the Jobs Act. On the one hand, the hiring subsidy was proportional to wages, but had a cap, hence was more generous for small firms- typically paying lower wages than large firms – making them particularly responsive along the job creation margin. On the other hand, the reduction in firing costs applied mainly to large firms concentrating on them the adjustment along the job destruction margin. To investigate empirically the effects of the Italian Jobs Act, we draw on a unique dataset covering the universe of private firms in Italy having at least once 10–20 employees in the two years prior to the reform of January 2015. We find evidence of a substantial increase in open ended hirings, and in the transformation of fixed-term into open ended contracts, in the aftermath of the Jobs Act. The effects of the Jobs Act on firings- conversely- are much smaller, and are concentrated on large firms, while small firms react more intensively- creating new open ended contracts- to the hiring subsidy
Il Jobs Act come esperimento quasi scientifico: cosa suggeriscono i dati?
No full textValutazione del Jobs Act confrontando dinamica delle imprese non toccate dalla rifroma comn quelle imprese coinvolte dalla riform
Temporary employment in markets with frictions
No full textTemporary employment has spiked in OECD countries over the last 40 years and is now a common feature of their labor market landscape. A large body of empirical literature examines the spread of temporary employment, but no systematic review and interpretation of its findings in light of economic theory exists. This survey aims at filling this gap by interpreting the key empirical results based on the predictions of the macro models in markets with frictions developed to address specific features of temporary employment. Revisions of workhorse models used so far to analyze temporary employment are also suggeste
Are Labour Markets in the New Member States Sufficiently Flexible for EMU?
No full textThis paper investigates whether labour market in New Member States (NMS) are sufficiently flexible for early Euro adoption or further labour market reforms are necessary before EMU entry. Despite strong output growth in most NMS, labour market conditions are not improving and non-employment rates are large even by European standards. Nevertheless, postponement of Euro adoption is not advisable and may actually worsen labour market outcomes. We reach this conclusion in two steps. First, we argue that NMS display a fair degree of macroeconomic flexibility, as well as labour market flexibility. We also document that these countries exhibit wage bargaining institutions that are actually better equipped for microeconomic wage flexibility than in many current EMU Members. Second, we evaluate and discuss the responsiveness of employment to macroeconomic policies, focusing on jobless growth, a macroeconomic pathology that has recently hit the region. We show that jobless growth is associated to loose fiscal policies. Thus, Euro adoption and the associated fiscal tightening may actually be beneficial in labour market terms
Two-tier Reforms of Employment Protection: A Honeymoon Effect?
No full textLabor market reforms increasing flexibility “at the margin” have been recently paying out in terms of
employment growth. This paper argues that two-tier labor market reforms have a transitional “honeymoon”,
job creating effect. In a dynamic model of labor demand under uncertainty, the paper predicts that in
the aftermath of reforms, beyond an increase in employment, there should be a reduction in “employment
inaction” and in the mean and cross sectional variance of labor productivity. Based on a variety of firm-level
data on Italy in the period 1995-2000, we find evidence of our empirical implications
Shadow Sorting
No full textThis paper investigates the border between formal employment, shadow employment, and
unemployment in an equilibrium model of the labor market with market frictions. From the
labor demand side, firms optimally create legal or shadow employment through a mechanism
that is akin to tax evasion. From the labor supply side, heterogeneous workers sort across the two
sectors, with high productivity workers entering the legal sector. Such worker sorting appears
fully consistent with most empirical evidence on shadow employment. The model sheds also
light on the "shadow puzzle", the increasing size of the shadow economy in OECD countries
in spite of improvements in technologies detecting tax and social security evasion. Shadow
employment is correlated with unemployment, and it is tolerated because the repression of
shadow activity increases unemployment. The model implies that shadow wage gaps should be
lower in depressed labor markets and that deregulation of labor markets is accompanied by a
decline in the average skills of the workforce in both legal and shadow sectors. Based on micro
data on two countries with a sizeable shadow economy, Italy and Braziil, we find empirical
support to these implications of the model. The paper suggests also that policies aimed at
reducing the shadow economy are likely to increase unemployment
Equilibrium Search Unemployment, Endogenous Participation and Labor Market Flows.
Full text linkThe sustainability of Welfare States requires high employment/high participation to raise the tax base and avoid distortions. To analyse labour market participation decisions in a world with market frictions, we propose and solve a three-state macro model of the labour market. We show that workers' decisions of entering into the labour market and exiting from the labour market are fundamentally different in the presence of frictions: irreversible costs paid by workers at the entry level imply that labour supply is determined by two margins, the entry and the exit margins. On the normative point of view, we show that the existence of two margins alters significantly the conventional effects of payroll taxes and unemployment benefits. On the positive point of view, our model rationalizes the existence of most labour market flows and of 'marginally attached workers'. Furthermore, a calibration improves the usual representations of labour markets.
Financial Shocks and the Labor Markets: Should Economic Policy Save Jobs?
No full textReviews the basic facts on unemployment dynamics, financial shocks, and Okun’s elasticity over the business cycle; highlights the key mechanisms linking financial markets and labor markets, drawing on the most recent theoretical and empirical research in the area; and draws attention to the policy implications of this line of research. In the United States, unemployment virtually doubled within a few quarters and is receding only very slowly, while unemployment rates changed much less in Europe, but with considerable heterogeneity across countries. Unemployment has responded much more strongly to the output decline associated with the Great Recession than during earlier contractionary periods. Two channels whereby financial distress can be transmitted to the labor market are the job destruction effect and the labor mobility effect. Policies should focus on saving financial institutions because of their systemic significance, on deciding which sectors to pick for saving jobs, and on arguing for moral hazard, which might predispose firms to build up leverage in anticipation of being helped
Inside severance pay
Full text linkThe accepted and peer reviewed manuscript to the articleAll OECD countries have either legally mandated severance pay or compensations imposed by industry-level bargaining in case of employer initiated job separations. The paper shows that mandatory severance is optimal in presence of wage deferrals induced by workers' moral hazard. We also establish a link between optimal severance and efficiency of the legal system and characterize the effects of shifting the burden of proof from the employer to the worker. Quantitatively, the welfare effects of suboptimal severance payments vary in general equilibrium between 1 and 3 %. The model accounts also for two neglected features of the legislation. The first is the discretion of judges in declaring the nature, economic vs. disciplinary, of the layoff. The second feature regards the relationship between severance and tenure. Our theory gives necessary conditions under which optimal severance is increasing with tenure, as generally observed.2. Forfatterversjo
Beyond Eurosclerosis
No full text"Europe no longer suffers from Eurosclerosis; unemployment, notably long-term unemployment, had decreased substantially for more than a decade. Mobility across labour market states increased in those countries where unemployment has been falling the most. Institutional reforms -- such as declining employment protection for new entrants in the labour market and less generous unemployment benefits -- account for this increase in mobility. Focusing on these reforms, we rationalize why EU workers, including those with permanent contracts, are increasingly unhappy about labour market conditions in spite of the disappearance of mass unemployment in Europe. Due to these perceptions, policy reversals cannot be ruled out. Governments wishing to minimize the risk of going back to Eurosclerosis should move towards flexicurity configurations, compensating workers for higher risks of job loss, and introduce tenure tracks to the labour market, preventing the development of dual labour market structures. This would avoid dissipating the employment gains of the last decade during this recession." Copyright (c) CEPR, CES, MSH, 2009.
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