Employment Protection, Job Insecurity, and Job Mobility

Arbeitspapier

This study leverages the Italian Jobs Act reform as a natural experiment to examine the impact of reduced employment protection on job insecurity and job mobility. The reform significantly lowered protection for open-ended contract workers in large firms hired after March 7, 2015, and introduced a sharp discontinuity in severance pay at 2-year tenure. Treated employees exhibit increased fear of job loss and higher termination rates. The higher job insecurity prompts workers in low-pay sectors and in low-quality firms to actively pursue job mobility, transitioning towards higher-paying positions. Conversely, workers in high-paying sectors respond by intensifying their efforts to secure their existing jobs. Crucially, all effects disappear for workers above the 2-year tenure threshold, when they become entitled to a 50% higher severance pay. These findings emphasize a complex trade-off behind the design of employment protection systems, as addressing early-stage insecurity with tailored social insurance may counteract upward mobility effects.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 16647

Classification and Topics

• Classification: Wirtschaft ; Time Allocation and Labor Supply ; Safety; Job Satisfaction; Related Public Policy ; Labor Contracts ; Unemployment Insurance; Severance Pay; Plant Closings
• Subject: employment protection ; job insecurity ; job mobility ; on-the-job search

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Bertoni, Marco ; Chinetti, Simone ; Nistico, Roberto
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/282774
• Last update: 10.03.2025, 11:43 AM CET