published in: J. Messina, C. Michelacci, J. Turunen and G. Zoega (eds.), Labour Market Adjustments in Europe, Edward Elgar 2006
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.
We use cookies to provide you with an optimal website experience. This includes cookies that are necessary for the operation of the site as well as cookies that are only used for anonymous statistical purposes, for comfort settings or to display personalized content. You can decide for yourself which categories you want to allow. Please note that based on your settings, you may not be able to use all of the site's functions.
Cookie settings
These necessary cookies are required to activate the core functionality of the website. An opt-out from these technologies is not available.
In order to further improve our offer and our website, we collect anonymous data for statistics and analyses. With the help of these cookies we can, for example, determine the number of visitors and the effect of certain pages on our website and optimize our content.