Giovanna Vallanti

Job Flow Dynamics and Firing Restrictions: Evidence from Europe

We exploit homogeneous firm level data of manufacturing and non-manufacturing sectors to study the impact of firing restrictions on job flow dynamics across 14 European countries. We find that more stringent firing laws dampen the response of job destruction to the cycle, thus making job turnover less counter-cyclical. Moreover, the impact of firing costs on job creation and job destruction varies across sectors, depending on sector-specific trend growth. Our findings clearly suggest that such costs are more important in contracting than in growing sectors.

The Impact of TFP Growth on Steady-State Unemployment

Theoretical predictions of the impact of TFP growth on unemployment are ambiguous, and depend on the extent to which new technology is embodied in new jobs. We evaluate a model with embodied and disembodied technology, capitalization, and creative destruction effects by estimating the impact of TFP growth on unemployment in a panel of industrial countries. We find a large negative impact which implies that embodied technology and creative destruction play no role in the steady-state dynamics of unemployment. Capitalization effects explain some of the estimated impact but a part remains unexplained.

Flexible Wage Contracts, Temporary Jobs, and Firm Performance: Evidence from Italian Firms

This paper focuses on the effects of decentralized wage schemes and temporary forms of employment on worker/firm performance. The effect of monetary incentives on worker effort and firm performance is a central topic in economics. According to the principal-agent paradigm, firms (the principal) have to link employees’ remuneration scheme to any verifiable indicator of performance in order to avoid opportunistic behaviours. The effectiveness of incentives on workers’ behaviour may vary significantly accordingly to the institutional/economic context in which the firms operate but in general the empirical evidence shows that financial incentives have the potential to exert strong effects on indicators of firm performance, such as productivity and worker absenteeism. Both from a theoretical and empirical point of view, the prediction on the effects of temporary forms of employment on effort and productivity is less neat. In light of these considerations, the aim of this paper is to provide further empirical evidence on whether and to what extent the performance related pay and the contract flexibility affect workers effort and in turn firm productivity for different type of workers (white collar vs. blue collar), working in workplaces characterized by different degree of uncertainty and risk and in firms operating in different economic and institutional settings using a sample of Italian firms. According to our results, wage flexibility appears to have a significant effect on effort and then on firm’s productivity and white collars are more responsive to monetary incentives than blue collars. Moreover, the presence of a large share of temporary contracts implies a lower dismissal probability for permanent workers and a deterioration in the working environment and then it reduces workers’ motivation and effort.

Female labour market participation in Europe: novel evidence on trends and shaping factors

We investigate the changes in women’s participation patterns across 15 EU countries over the last 20 years using individual data from ECHP and EUSILC databases. Our findings show that the observed trends in female participation differ substantially both across countries and across different groups of women. We explore such heterogeneity in trends by looking at the effects of policies and labour market institutional factors on the participation of women with different family and individual characteristics. Our estimates reveal a role of policies and institutions that is stronger than what has so far been assessed. Labour market institutions and family-oriented policies explain almost 25% of the actual increase in labour force participation for young women, and more than 30% for highly educated women. Surprisingly, changes in the institutional and policy settings contribute less in explaining the participation of low-skilled women. We also find that reforming the institutional framework towards a model of “flexicure” labour market is effective in enhancing women labour supply only when deregulation is accompanied by sufficient social compensation.JEL ClassificationJ11, J21, J2

Reforms, Labour Market Functioning and Productivity Dynamics: A Sectoral Analysis for Italy

Over the last two decades Italy registered notable improvements in the functioning of labour market. However, such improvements have been accompanied by a deterioration in terms of productivity and competitiveness. This paper provides some evidence in this respect evaluating to what extent labour market reforms might have influenced the poor productivity performance of the Italian economy over the period 1980-2008. We show that labour market deregulation had a negative effect on aggregate labour productivity through both the within and the reallocative components. Our results show that the increased flexibility in the use of temporary contract has led to a lower productivity (level and to a lesser extent growth rate) in all sectors, with a higher impact on those industries with a higher flexibility need. Conversely, the use of temporary contracts has a significant lower effect in industries with higher skill content. The negative effect of the reforms on the reallocative capacity is stronger in those industries with a higher flexibility need that are also the relatively lower productivity sectors in the period 1993-2008.

International Capital Mobility and Unemployment Dynamics: Empirical Evidence from OECD Countries

We use a panel of 20 OECD countries over a 30-year period to investigate empirically the implications of international capital mobility for aggregate unemployment dynamics. To this aim, we employ standard regression analysis and dynamic simulations to illustrate the channels through which international capital mobility impacts unemployment adjustments to productivity shocks and in turn quantify its effect on unemployment volatility. We find that capital mobility plays a significant role in generating unemployment responses to idiosyncratic productivity shocks which are wider but less persistent. Moreover, the evidence we provide suggests that the responsive- ness effect dominates the persistence effect, implying a net increase in unemployment volatility due to higher international capital mobility. Finally, if we simulate the effects of an increase of international capital mobility of the same order of magnitude of that occurred in the OECD countries after the mid-80s, we obtain a rise in the volatility of unemployment rate which is comparable to that observed in those countries in the same years.

Institutions' and Firms' Adjustments: Measuring the Impact of Courts' Delays on Job Flows and Productivity

Not only is labor-market rigidity the result of legislative provisions, but it is determined by the institutional framework at large. We argue that courts’ delays in settling labor disputes affect the strictness of employment-protection legislation by increasing the expected firing costs. We exploit the variation in the length of labor trials across Italian judicial districts and the fact that the Italian legislation regarding firing prescribes different firing regimes for firms above the 15-employee threshold and provide evidence on the impact of courts’ delays on job reallocation and firms’ productivity. We show that in judicial districts with longer trials, the rate of job turnover is significantly lower. This occurs through lower rates of job destruction and, to a lesser extent, job creation. We also find a detrimental impact of courts’ delays on the labor productivity of firms above the 15-employee threshold. The effect is stronger in sectors with higher flexibility requirements.

The two sides of academic research: do basic and applied activities complement each other?

It is generally acknowledged that the cuts in government funding for research implemented in several European countries will induce academic researchers to increase their interaction with non academic entities to promote the acquisition of external funding for research. Indirectly this implies that there will be a shift in the focus of academic scientific activity from basic to applied research via private research contracts and consultancy work. The aim of our paper is to assess the extent of the trade-off between basic research and applied activity in academic research departments. We use data for the universe of Italian academic departments over the period 2006–2011 and estimate whether increased applied activity is substituting or complementing basic research activity. We provide empirical evidence of a strong substitution effect for life sciences departments and, to a lesser extent, for engineering and technology departments, while there does not seem to be evidence of a substitution effect for departments whose scientific activity revolves around basic science.