Maria Laura Parisi

Experience, Innovation, and Productivity Empirical Evidence from Italy’s Slowdown

The authors investigate whether the level of employee experience is good or bad for innovation and productivity. Using a sample of Italian manufacturing firms during the early 2000s, the authors find different results for managers’ versus workers’ experience. The effect of managerial experience—proxied by age—on firm performance appears to depend on the type of firm; in innovative firms, having older managers and board members has a negative effect on innovation and productivity, while in non-innovative firms, the costs and benefits of having older managers appear to cancel each other out. For workers, the effect of having a high share of inexperienced (temporary) workers is unambiguously associated with low innovation and low productivity. These results also hold when endogenous regime switching is taken into consideration.

Productivity, Innovation Creation and Absorption, and R&D: Micro Evidence for Italy

By exploiting a rich firm level database, this paper presents novel empirical evidence on the impact that the introduction of process and product innovations exerts on productivity, as well as on the role played by R&D and fixed capital investment in enhancing the likelihood of introducing innovations at the firm level. Our results imply that process innovation has a large impact on productivity. Furthermore, R&D spending is strongly positively associated with the probability of introducing a new product, whereas fixed capital spending increases the likelihood of introducing a process innovation. The latter result rejects the fact that new technologies are frequently embodied in new capital goods. However, the effect of fixed investment on the probability of introducing a process innovation is magnified by R&D spending internal to the firm. This implies that, in our sample, R&D affects productivity growth by facilitating the absorption of new technologies.

Organizational Innovations and Labor Productivity in a Panel of Italian Manufacturing Firms

We study determinants of the probability of introducing an organizational innovation using three large cross sections of Italian manufacturing firms in the period 1995-2003. We analyze the effect and complementarity of other types of investments, like ICT, R&D, human and physical capital and the adoption of product or process innovations. Furthermore, we estimate the effect of introducing organizational innovations and indirectly technical innovations on the growth rate of labor productivity for the unbalanced panel of firms. Disembodied technological change is well represented by OIs, while product innovations seem to heve an effect on the efficiency of capital inputs only (capital stock-embodied technical change). Process innovations do not have a statistical impact as an indirect input-efficiency driving force, in our data.

Service Deregulation, Competition, and the Performance of French and Italian Firms

We use firm-level data for France and Italy to explore the impact of service regulation reform implemented in the two countries on the mark-up and eventually on the performance of firms between the second half of the 1990s and 2007. In line with some previous studies, we find that the relation between entry barriers and productivity is negative. This relation is intermediated through the firm’s mark up and is stronger in the long than in the short run.

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.

Italy's Ace Tax and its Effect on a Firm's Leverage

This article describes the new ACE-type system implemented in Italy since 2012. We have first shown that this system reduces but does not eliminate the financial distortion due to interest deductibility. Using a dataset of Italian companies, we analyzed the impact of this relief on Italian firm capital structure. Despite the permanence of a tax advantage and its gradual implementation, the ACE relief is estimated to reduce significantly leverage. By decreasing default risk it is also expected to reduce systemic risk.

Social Interactions and the Digital Divide: Identification and Policy Implications

Abstract In the light of recent policies aiming at raising the computer literacy of young generations and at reducing the digital divide, this paper analyzes to what extent the probability of an individual having computer abilities is affected by the computer skills of her households other members, i.e. if there are significant within household peer effects. We show how peer effects can be identified when skills are measured with a continuous variable and the learning costs are increasing and convex. Our application on a sample of Italian households indicates that peer abilities within a family significantly increase the individual probability of being skilled.

Beyond National Institutions: Labor Taxes and Regional Unemployment in Italy

By focusing on the Italian experience, we ask whether the relationship between labor taxes and unemployment varies across regions. In spite of similar national labor market institutions, we show that this relationship is significantly stronger in the highly industrialized North than in the under-developed South, where unemployment is much higher. An important source of variation in the regional responsiveness of unemployment originates from the fact that regional gross wages in the North increase more than in the South in response to a hike in labor taxes. Regional wage setting affects regional employment (and unemployment) both directly and indirectly, via its impact on regional profits and the capital stock.

Labour Productivity, Temporary Work, and Youth Unemployment: The Experience of Southern Europe

Southern European countries with stagnating labour productivity have seen also a high and persistent presence of youth unemployment in the past 20 years. The latest crisis has further exacerbated these two negative macroeconomic phenomena, hitting other virtuous countries in the region. The size and persistence of youth unemployment have become unacceptable after 2010. Stagnation in labour productivity goes back to the 1990s, but it has not improved since then and even worsened after the crisis. The interaction of these two phenomena might reinforce each other. This work analyses one possible way for reinforcement.

Labor Taxes, Wage Setting and the Relative Wage Effect

Public finance solutions to high unemployment in Europe have often been advocated during the past years. With unemployment concentrated among the young and unskilled, it has been suggested that the reduction of social security contributions for low wage earnings, financed by a carbon tax, could yield a double dividend, the reduction of unemployment and the abatement of pollution. A decline in average labor taxes reduces unemployment if it generates lower pretax wages. Pretax wages fall if real after tax income from unemployment and leisure is not affected or only partially affected by the change in average taxes. When unemployment benefits are not taxed in a unionized economy, lower average labor taxes reduce the replacement ratio, and unions are willing to accept lower pretax wages because the net income loss from employment increases. Changes in labor taxation do not necessarily require that average labor taxes vary. In principle, a switch from payroll to income taxes, given average rates, could affect wage pressure and unemployment. The empirical evidence to date, however, does not support this possibility. When labor taxation is nonlinear, another opportunity is to vary the degree of labor tax progressivity. Economic theory suggests that higher progressivity could reduce unemployment. Suppose that wages are bargained over by unions. When a union contemplates the possibility of a wage hike, it has to consider that say for a 1% increase in the after tax wage the pretax wage increases by 1/v, where v denotes the coefficient of residual income progression. This implies that the expected employment loss associated to the higher after tax wage is e/v, where e is the elasticity of labor demand. Since v This empirical paper adds to the existing literature additional evidence based on Italian data. We use both panel and grouped data to study the effects of average and marginal (payroll and income) tax rates on wage pressure, and investigate whether these effects vary by skill, age group and region of residence. Our empirical findings are summarized as follows: a) changes in average payroll taxes are not fully absorbed by offsetting changes in the after tax wage and affect both pretax wages and employment; b) the estimated effects of changes in average income taxes on pretax wages are mixed but on balance the evidence suggests that after tax wages do not fully offset these changes; c) higher tax progressivity increases pretax wages; d) there are significant differences in the relationship between labor taxes and pretax wages by age group but not by region of residence or skill. We also find that the estimated elasticity of pretax wages to changes in marginal tax rates, given average rates, is large and ranges between 0.919 and 1.131, depending on the specification being used. It is difficult to explain this large positive elasticity exclusively with the argument that the labor supply effect prevails over the wage moderation effect. Therefore, we add an additional mechanism, the relative wage effect, and describe how it can contribute to producing the above results. Briefly put, when individuals and unions care about relative wages and an increase in tax progressivity reduces the own wage via the wage moderation effect, this reduction translates into lower relative wages, which can only be avoided by increasing wage pressure.