Fabrizio Pompei

Temporary Job Protection and Productivity Growth in EU Economies

The present study examines cross-national and sectoral differences in Total Factor Productivity (TFP) in fourteen European countries and ten sectors from 1995 to 2007. The main aim is to ascertain the role of employment protection of temporary contracts on TFP by estimating their effects with a “difference-in-difference” approach. Results show that deregulation of temporary contracts negatively influences the growth rates of TFP in European economies and that, within sectoral analysis, the role of this liberalisation is greater in industries where firms are more used to opening short-term positions. By contrast, in our observation period, restrictions on regular jobs do not cause significant effects on TFP, whereas limited regulation of product markets and higher R&D expenses positively affect efficiency growth.

Labour market flexibility and innovation: geographical and technological determinants

Purpose - This paper aims to shed light upon the controversial relationship between labour market flexibility and innovation in Italy, paying attention both to inter-sectoral heterogeneity and to the regional differences. Design/methodology/approach - A set of hypotheses concerning the context-dependent relationship between labour market flexibility and innovation has been formulated by combining the main results of the theoretical literature concerning this topic. Regional patents are used as a proxy of innovation, while job turnover and wages represent labour market indicators of flexibility. Non-parametric models and dynamic structural specification of panel data have been estimated to test the aforementioned hypotheses. Findings - The results show that higher job turnover has a significant and negative impact on patent activities in regional sectors of northern Italy, while a positive and significant effect of blue and white collar wages has been generally found in the estimations. Research limitations/implications - There is a lack of updated information regarding labour market data in the Italian economy. Practical implications - Knowing in which sectoral and regional context labour flexibility has (or does not have) a positive influence on innovation plays a key role for the decisions of policy makers. Originality/value - This paper deals with the influence that the heterogeneity of the contexts (at the sectoral and geographical level) exerts on the relationship between the labour market and innovation. Moreover, the endogenous character of this relationship and the cumulative nature of innovative activities have been taken into account by means of a parsimonious dynamic econometric model.

Mergers, Acquisitions and Technological Regimes: The European Experience over the Period 2002-2005

Comparisons by countries and by sectors of mergers and acquisitions have usually been performed in separate fields of research. A first group of studies, focusing on international comparisons, has explored the role of corporate governance systems, investor protection laws and other countries’ regulatory institutions as the main determinants of takeovers around the world. A second group of contributions has attributed a central role to variations in industry composition, documenting that, in each country, mergers occur in waves and within each wave clustering by industry is observed. This paper aims to integrate both perspectives and to make comparisons by countries and by sectors, thus exploring the role of various driving forces on takeover activities. It also intends to consider the specific influence that technological regimes and their innovation patterns may exert in reallocating assets and moving capital among sectors. This will be done by examining the European experience of the last few years (2002-2005). We found that even in countries where transfer of control is a frequent phenomenon, mergers are less frequent in those sectors where innovation is a cumulative process and where takeovers may be a threat to the continuity of accumulation of innovative capabilities.

Labour Shares and Employment Protection in European Economies

Liberalisation of temporary contracts has become an important component of recent labour reforms but up to now available research has not paid attention to the impacts of these institutional changes on functional income distribution. The present paper intends to fill this gap by focussing on the reduction in strictness of employment protection of temporary jobs and analysing its effects on factor shares. We have estimated labour share, as well as its components, worker pays and employment, by considering country-sector evidence for 14 EU economies and the sample period 1995-2007. We have found that these legislative changes, that have favoured the extensive use of temporary contracts, have contributed to instability of working conditions and caused negative effects on workers’ pays. These impacts have more than counterbalanced the scanty positive effects on employment (due to greater access to the labour market of additional workers, likely young and women), thus leading to a decrease in income share accruing to workers.

Family Firms and Labor Productivity: The Role of Enterprise‐Level Bargaining in the Italian Economy

We investigate the role of Italian firms in labor productivity performance. We find that family‐owned firms have lower labor productivity than their non‐family counterparts. In a second step, we estimate the role of firm‐level bargaining (FLB) to determine whether family‐controlled firms that adopt this type of bargaining may partially close the gap in terms of labor productivity with their non‐family competitors. Our results, obtained through IV estimation to control for endogeneity bias, suggest that enterprises under family governance achieve significant labor productivity gains—greater than those achieved by their non‐family counterparts—when they adopt firm‐level bargaining.

Inequalities during and after transition in Central and Eastern Europe

Foreword Jens Holscher Introduction Cristiano Perugini and Fabrizio Pompei 1. Income Distribution During and After Transition: a Conceptual Framework Cristiano Perugini and Fabrizio Pompei PART I: PERSONAL AND FUNCTIONAL INCOME DISTRIBUTION PATTERNS DURING TRANSITION 2. The Drivers of Personal Income Inequality in Transition and the Role of Reform Approaches David Aristei and Cristiano Perugini 3. Functional Income Distribution in European Transition Countries Ana Rincon-Aznar, Francesco Venturini, Michela Vecchi 4. Emigration, Employment and Inequality in Post-Communist Countries Cristiano Perugini and Fabrizio Pompei PART II: MICROECONOMICS ANALYSIS OF INCOME DISTRIBUTIONS AND THE ROLE OF INSTITUTIONAL SETTINGS 5. Income Mobility in the New EU Member States David Aristei and Cristiano Perugini 6. Earnings Inequality and Job Positions across Post-Communist European Economies Cristiano Perugini and Fabrizio Pompei 7. Wage Inequality Between and Within Education Levels in Transition Countries Cristiano Perugini and Fabrizio Pompei 8. Gender Earnings Inequality in the New EU Member States Cristiano Perugini and Ekaterina Selezneva 9. Gender Wage Inequality in the Western Balkans Marko Vladisavljevic, Sonja Avlijas and Suncica Vujic PART III: REDISTRIBUTIVE PREFERENCES AND ARRANGEMENTS 10. The Solidarity Principle in the New EU Member States Valentina Colcelli 11. Social Preferences for Redistribution in Central Eastern Europe and in the Baltic Countries David Aristei and Cristiano Perugini 12. Welfare and Redistribution in Post-Communist Countries Martin Myant and Jan Drahokoupil

Wages and Labour Productivity: The Role of Performance-Related Pay in Italian Firms

This paper analyses the role of Performance Related Pay (PRP) agreements on labour productivity and wages. Its main contribution is thus to investigate the effects of PRP on both dimensions, i.e. productivity and distribution, whereas most of the studies of related literature are restricted to one of those aspects. All estimates are performed for a large sample of manufacturing and service Italian firms with more than five employees and a restricted sample including only unionised firms. It allows us to focus on a relevant feature of industrial relations represented by worker representation and its role in local wage setting in the Italian economy. The expected positive link between PRP and firm performance has been confirmed in all estimates, also controlling for a rich set of covariates. Furthermore, the comparison of productivity estimates with those for wages allows us to ascertain that payments by results might be not only rent-sharing devices, but schemes that substantially lead to efficiency enhancements. These findings have been validated by a number of robustness checks, also taking into account endogeneity by using instrumental variables and the treatments of 3SLS. The paper argues that well designed policies, that circumvent the limited implementation of PRP practices, would guarantee productivity improvement. The real effectiveness of these measures would not be weakened under union governance.

The market for corporate control: do countries and technological regimes matter?

Using DATASTREAM and LexisNexis databases, we examine the experience from 1995 to 2005 for eight European countries and 21 sectors, and compute the frequency of merger transactions at sectoral level, controlling for the roles of country variables and focusing on distinct technological patterns of innovation. We found that, even in market‐based countries, where transfer of control is a frequent phenomenon, mergers are less frequent in those sectors where innovation follows cumulative processes and where takeovers represent a ‘breach of knowledge.’ This study provides empirical support to the fruitful line of research of varieties of capitalism (Hall and Soskice 2001) and shows that sectoral differences in M&A (mergers and acquisitions) may be seen in their complementarities with differences by country and their institutional frameworks. Results confirm that acquisitions may occur even in those economies where block‐holders are present, but where the good quality of institutions leaves no space for defence against takeovers. It also highlights the significant role played by takeover regulation, and suggests that the recent reforms in European harmonization should be implemented, so that the obstacles impeding takeovers can be removed. However, policy‐makers should also try to identify for which economies and sectoral fields of specialization, merger activities produce more beneficial effects and which turn out to be detrimental.

Labour protection and productivity in the European economies: 1995-2005

The present study examines cross-national and sectoral differences in multifactor productivity growth in sixteen European countries from 1995 to 2005. The main aim is to ascertain the role of flexible employment contracts and collective labour relationships in explaining the ample differentials recorded in the European economy. Research Findings We use the EU KLEMS database for growth accounting and a broad set of indicators of labour regulations, covering two distinct ‘areas’ of labour regulation: employment laws and collective relations laws. This comprehensive approach allow us to consider arrangements that regulate allocation of labour inputs (fixed-term, part-time contracts, hours worked) and of payoff and decision rights of employees. We find that, since 1995, European countries have not followed similar patterns of growth. A large number of variations between European economies are caused by deep differentials in multifactor productivity and part of this heterogeneity is caused by sectoral diversities. We show that, in labour-intensive sectors such as services, fixed-term contracts, which imply shorter-term jobs and lower employment tenures, may discourage investment in skills and have detrimental effects on multifactor productivity increases. We also find that some forms of labour regulation and arrangements that give a ‘voice’ to employees mitigate these perverse effects on efficiency patterns. Employment protection reforms which slacken the rules of fixed-term contracts cause potential drawbacks in terms of low productivity gains. More stringent regulation of these practices, as well as a climate of collective relations, sustain long-term relationships and mitigate these negative effects.

Enterprise-level bargaining and labour productivity of Italian family firms: a quantile regression analysis

We investigate the role of Italian firms to evaluate their role on labour productivity performance. We find that family owned firms are less efficient than their no-family counterparts and also that family management negatively affects labour productivity. Furthermore, we estimate the role of firm level bargaining to verify whether family controlled firms, adopting these types of agreements, may partially close their efficiency gap with respect to their competitors. We find that enterprises under family governance obtain significant efficiency gains when they adopt firm level bargaining, greater than those obtained by their no-family counterparts.