The Effects of Partial Employment Protection Reforms: Evidence from Italy (joint with Sabrina Di Addario and Diego Daruich)

Concerns over labor market flexibility have been at the center of the European political debate for the past three decades. In response to the widespread belief that rigid employment protection laws (EPL) depress employment, many countries including France, Spain, and Italy undertook reforms that substantially relaxed legal constraints on the use of temporary employment contracts. Importantly, however, these reforms were often only partial in that the degree of employment protection granted to workers hired via permanent employment contracts remained unchanged, leading to a fundamentally dual labor market. This dissertation examines detailed Italian social security records matched with firm financial data and a difference-in-differences research design to provide a comprehensive empirical evaluation of an Italian partial reform signed into law in 2001 which help illuminate how the reform affected overall employment and labor income, what factors contributed to success or failure in raising wages and employment, and were there heterogenous effects across different worker and firm groups