Employment Protection Legislation, Capital Investment and Access to Credit
Evidence from Italy
Bibliographic Data
| ID | 9715335 |
|---|---|
| Authors | Federico Cingano (Bank of Italy and OECD), Marco Leonardi (0000-0002-7989-1162, University of Milan and IZA), Julián Messina (0000-0001-7829-1272, Inter-American Development Bank and IZA), Giovanni Pica (University of Salerno, CSEF, Paolo Baffi Centre and Centro Luca D'Agliano) |
| Year | 2016 |
| Volume | 126 |
| Issue | 595 |
| Pages | 1798-1822 |
| Publication date | 2016-09-01 |
| Peer Reviewed | Yes |
| Open Access | Yes |
| Type | ARTICLE |
| Venue | The Economic Journal (JOURNAL) |
| Journal identifiers | ISSN: 0013-0133 • E-ISSN: 1468-0297 |
| Publisher | Oxford University Press (OUP) (PUBLISHER) |
| DOI | 10.1111/ecoj.12212 |
| OpenAlex | W3122011064 |
| Language | EN |
| Citations received | 15 |
| References cited | 46 |
This article estimates the causal impact of dismissal costs on capital deepening and productivity, exploiting a reform that introduced unjust‐dismissal costs in Italy for firms below 15 employees, leaving firing costs unchanged for larger firms. We show that the rise in firing costs induced an increase in the capital‐labour ratio and a decline in total factor productivity in small firms relative to larger firms. Our results indicate that capital deepening was more pronounced at the low‐end of the capital distribution – where the reform hit arguably harder – and among firms endowed with a larger amount of liquid resources. We also find that stricter Employment Protection Legislation (EPL) raised the share of high‐tenure workers, which suggests a complementarity between firm‐specific human capital and physical capital in moderate EPL environments
Business · Capital (architecture · Capital deepening · Capital formation · Complementarity (molecular biology · Cost of capital · Dismissal · Economics · Employment protection legislation · Financial capital · Human capital · Incentive · Investment (military · Labour economics · Legislation · Macroeconomics · Market economy · Monetary economics · Physical capital · Productivity · Unemployment · Corporate Finance and Governance · Firm Innovation and Growth · Italy: Economic History and Contemporary Issues
Banks and informality
Unsettled
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Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation
| Unique citing works | 15 |
|---|---|
| Citations per year | 1,5 |
| Citation span | 2016 - 2026 (11) |
| Citation velocity | current |
| Highly cited | No |
| Citation types | Neutral: 14 |