Alessandra Del Boca

Profit related pay in Italy

This paper investigates which company characteristics affect the decision to introduce profit‐sharing. Unlike most studies, this paper relies on a ten‐year panel. The results presented in this paper are based on the estimation of a panel data fixed‐effect logit model. Given that they are immune from heterogeneity bias, it is believed that these results are more reliable than those obtained by estimating cross‐sectional models. These results are in line with the common findings of the literature. Companies that are more likely to introduce profit‐sharing (PS) are larger firms which invest more, due to the lower cost of debt, and tend to pay higher wages as an incentive to boost the initially lower productivity. These companies are more likely to undertake investment projects which support the interpretation of PS as a risk‐sharing device.

How Much Does Hiring and Firing Cost? Survey Evidence from a Sample of Italian Firms

We analyse the Italian labour market, which is typically considered to be highly regulated. We focus on the costs imposed on firms by the institutional environment in which they operate, and on the adjustment strategies that they pursue as a result. We have followed two complementary approaches: the analysis of the development of the laws relating to hiring and firing, together with a set of interviews of 61 manufacturing firms. This also allows us to quantify the extent of turnover costs on the total labour costs. Hiring costs, which include recruiting and training, range between 2.0 and 2.6 months of labour costs; firing costs range from less than half a monthly labour cost to 20 months of labour costs in cases of conflict. Copyright Fondazione Giacomo Brodolini and Blackwell Publishers Ltd. 1998.

The Phillips curve and the Italian lira, 1861–1998

We examine Italian inflation rates and the Phillips curve with a very long-run perspective, one that covers the entire existence of the Italian lira from political unification (1861) to the entry of Italy in the European Monetary Union (end of 1998). We first study the volatility, persistence and stationarity of the Italian inflation rate over the long run and across various exchange-rate regimes that have shaped Italian monetary history. Next, we estimate alternative Phillips equations and investigate the extent to which nonlinearities, asymmetries and structural changes characterize the inflation-output trade-off in the long run. We capture the effects of structural changes and asymmetries on the estimated parameters of the inflation-output trade-off relying partly on sub-sample estimates and partly on time-varying parameters estimated with the Kalman filter. Finally, we investigate causal relationships between inflation rates and output and extend the analysis to include the US and the UK for comparison purposes. The inference is that Italy has experienced a conventional inflation-output trade-off only during times of low inflation and stable aggregate supply.

Investment and Time to Plan: A Comparison of Structures vs. Equipment in a Panel of Italian Firms

Time to build models of investment expenditures play an important role in many traditional and modern theories of the business cycle, especially for explaining the dynamic propagation of shocks. We estimate the structural parameters of a time-to-build model using firm-level investment data on equipment and structures. For equipment expenditures, we find no evidence of time-to-build effects beyond one period. For structures, by contrast, there is clear evidence of time to build in the range of 2-3 years. The contrast between equipment and structures is intuitively reasonable and consistent with previous results. The estimates for structures also indicate that initial-period expenditures are low, and increase as projects near completion. These results provide empirical support for including time to plan effects for investment in structures. More generally, these results suggest a potential source of specification error for Q models of investment and production-based asset pricing models that ignore the time required to plan, build and install new capital.

Why Does the Private Sector React Like the Public to Law 133? A Microeconometric Analysis of Sickness Absence in Italy

The problem of absenteeism has taken the centre of the stage of public attention when Renato Brunetta, the Public Employment Secretary, launched a reform of the public sector which started with a law on absenteeism. After the law was passed, the first evidence collected showed an average drop of 47% in sickness absence. This result was received with scepticism, but now we have enough evidence and research to draw some firm conclusions. This paper plans to investigate the effects of the Law 133/2008 and the shocks occurred after the changes in the law itself. We will study how employees characteristics in the private and public sector are related to absentee behaviour. The relationship between individual characteristics, such as wage, gender, age, tenure, education and the labor-leisure decision made by workers will be estimated in a micro-data model. The data come from a panel of individuals working in a large private company, operating all over Italy in the security sector, and one public sector institution,(AE) the tax collection Agency. The results indicate a remarkable direct and indirect reaction to the law in the public and also private sectors.

Non-convexities in the Adjustment of Different Capital Inputs: A Firm-level Investigation

Recent developments in investment research have highlighted the importance of non-convexities and irreversibilities in the firms’ adjustment of quasi-fixed inputs. However, aggregation across capital goods may smooth out the discontinuities associated with the adjustment of individual assets. The lack of suitable data, is one of the reasons why empirical work has stronlgy relied on the assumption of capital homogeneity. In this paper we exploit a new data set of 1539 Italian firms which allows us to disaggregate across several capital types and consider separately purchases and sales of assets. We start from the basic disaggregation between equipment and structures and construct measures of fundamental Q to capture investment opportunities associated with each asset. To uncover the pattern of dynamic adjustment we use non-parametric techniques to relate each individual investment to own fundamental Q.

Macroeconomic Instability and the Phillips Curve in Italy

The theme of this paper is whether there was a textbook-like inflation-output tradeoff in post-WWII Italy. We estimate both standard and time-varying parameter models of the relationship between inflation and the level of real economic activity over the 1949 to 2010 period and find no evidence of a stable, significant and positive association between output and prices. We attribute this evidence primarily to a fiscally dominated monetary policy and a rigid indexation mechanism aimed at protecting wages from inflation. These two institutions contributed to the persistent inflation bias and macroeconomic instability that lasted almost until the entry of the country in the European Monetary Union.