Employment protection and fertility: Evidence from the 1990 Italian reform

Arbeitspapier

The aim of this paper is to investigate the effect of Employment Protection Legislation (EPL) on fertility decisions of Italian working women using administrative data. We exploit a reform that introduced in 1990 costs for dismissals unmotivated by a fair cause or justified motive in firms below 15 employees and left firing costs unchanged for bigger firms. We use this quasi-experimental setup to study the hypothesis that increased EPL reduces future job insecurity and positively affects a female worker's proneness to take childbearing decisions. We use a difference in difference (OLS-DID) model to control for possible period-invariant sorting bias and an instrumental variable (IV-DID) model to account for time-varying endogeneity of the treatment status. We find that reduced economic insecurity following a strengthening of the EPL regime has a positive and sizable effect on fertility decisions of Italian working women. This result is robust to a number of checks regarding possible interactions with other policy reforms occurring around 1990, changes in the sample of workers and firms, and use of an alternative set of exclusion restrictions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 3805

Classification and Topics

• Classification: Wirtschaft ; Demand and Supply of Labor: General ; Fertility; Family Planning; Child Care; Children; Youth ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: fertility ; employment protection ; difference-in-difference ; instrumental variables ; policy evaluations

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Prifti, Ervin ; Vuri, Daniela
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2012

Further information

• Handle: http://hdl.handle.net/10419/57961
• Last update: 10.03.2025, 11:44 AM CET