A new GLO Discussion Paper on Labor Reforms, Employment Protection and Firm-provided Training

A new GLO Discussion Paper provides evidence that the 2012 Italian labor market reforms reducing firing restrictions substantially increased firm training of workers.

The reform is known as Fornero Law after the then Italian Labor minister, GLO Fellow Elsa Fornero. See for a recent debate with Fornero about the future of Europe after the EU elections in Budapest.

GLO Discussion Paper No. 368, 2019

Employment Protection and Firm-provided Training: Quasi-experimental Evidence from a Labour Market Reform – Download PDF
by Bratti, Massimiliano & Conti, Maurizio & Sulis, Giovanni

GLO Fellow Massimiliano Bratti

Author Abstract: In 2012 a labour market reform, known as Fornero Law, substantially reduced firing restrictions for firms with more than 15 employees in Italy. The results from a difference in regression discontinuities design that compares firms below versus those above the cut-off before and after the reform demonstrate that, after the Fornero Law, the number of trained workers increased in firms just above the threshold, with an order of magnitude of approximately 1.5 additional workers in our preferred empirical specification. We show that this effect might be partly explained by the reduction in worker turnover and a lower use of temporary contracts at the threshold after the reform. Our study highlights the counter-intuitive and potentially adverse effects of employment protection legislation (EPL) on training in dual labour markets due to larger firms seeking to avoid the higher costs of EPL by means of temporary contracts.

GLO Discussion Papers are research and policy papers of the GLO Network which are widely circulated to encourage discussion. Provided in cooperation with EconStor, a service of the ZBW – Leibniz Information Centre for Economics, GLO Discussion Papers are among others listed in RePEc (see IDEAS, EconPapers)Complete list of all GLO DPs downloadable for free.