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Employment Protection and Fertility: Evidence from the 1990 Italian Reform

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  • Ervin Prifti
  • Daniela Vuri

Abstract

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.

Suggested Citation

  • Ervin Prifti & Daniela Vuri, 2012. "Employment Protection and Fertility: Evidence from the 1990 Italian Reform," CESifo Working Paper Series 3805, CESifo.
    • Handle: RePEc:ces:ceswps:_3805
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Anche il Jobs act influenza le scelte di maternità
      by Maria De Paola, Roberto Nisticò e Vincenzo Scoppa in La Voce on 2020-06-02 09:03:44

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    4. Marco Leonardi & Giovanni Pica, 2013. "Who Pays for it? The Heterogeneous Wage Effects of Employment Protection Legislation," Economic Journal, Royal Economic Society, vol. 123(12), pages 1236-1278, December.
    5. Inga Laß & Irma Mooi-Reci & Mark Wooden & Martin Bujard, 2024. "Temporary employment and first births: A path analysis of the underlying mechanisms using Australian and German panel data," Melbourne Institute Working Paper Series wp2024n05, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
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    7. Adrián Nieto, 2018. "Permanent employment and fertility: The importance of job security and the career costs of childbearing," Discussion Papers 2018/01, University of Nottingham, Centre for Finance, Credit and Macroeconomics (CFCM).
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    9. Nieto, Adrián, 2022. "Can subsidies to permanent employment change fertility decisions?," Labour Economics, Elsevier, vol. 78(C).
    10. Maria De Paola & Roberto Nisticò & Vincenzo Scoppa, 2020. "Fertility Decisions And Employment Protection: The Unintended Consequences Of The Italian Jobs Act," Working Papers 202003, Università della Calabria, Dipartimento di Economia, Statistica e Finanza "Giovanni Anania" - DESF.
    11. Jörn H. Block & Christian O. Fisch & James Lau & Martin Obschonka & André Presse, 2019. "How Do Labor Market Institutions Influence the Preference to Work in Family Firms? A Multilevel Analysis Across 40 Countries," Entrepreneurship Theory and Practice, , vol. 43(6), pages 1067-1093, November.
    12. Gianluca Cerruti & Gianluca Mazzarella & Mauro Migliavacca, 2023. "Employment protection legislation and household formation: evidence from Italy," Review of Economics of the Household, Springer, vol. 21(3), pages 913-939, September.
    13. Llanos-Contreras, Orlando & Alonso-Dos-Santos, Manuel & Welsh, Dianne H.B., 2024. "Graduating college students apply here: Communicating family firm ownership and firm size," Journal of Family Business Strategy, Elsevier, vol. 15(1).
    14. Pieroni, Luca & d’Agostino, Giorgio & Lanari, Donatella & Scarlato, Margherita, 2023. "Temporary employment and fertility in Italy: The effect of two labor market reforms in the early 2000s," Economic Modelling, Elsevier, vol. 124(C).
    15. Zhao, Yuejun, 2023. "Job displacement and the mental health of households: Burden sharing counteracts spillover," Labour Economics, Elsevier, vol. 81(C).
    16. Elena Bastianelli & Raffaele Guetto & Daniele Vignoli, 2023. "Employment Protection Legislation, Labour Market Dualism, and Fertility in Europe," European Journal of Population, Springer;European Association for Population Studies, vol. 39(1), pages 1-27, December.
    17. Susanne Fahlén & Livia Sz. Oláh, 2018. "Economic uncertainty and first-birth intentions in Europe," Demographic Research, Max Planck Institute for Demographic Research, Rostock, Germany, vol. 39(28), pages 795-834.
    18. Chiara L. Comolli & Daniele Vignoli, 2019. "Spread-ing uncertainty, shrinking birth rates," Econometrics Working Papers Archive 2019_08, Universita' degli Studi di Firenze, Dipartimento di Statistica, Informatica, Applicazioni "G. Parenti".
    19. Nkechi S. Owoo & Monica P. Lambon-Quayefio, 2022. "Does Job Security Affect Fertility and Fertility Intentions in Ghana? Examining the Evidence," Journal of Family and Economic Issues, Springer, vol. 43(1), pages 86-99, March.
    20. Francesca Carta & Alessandra Casarico & Marta De Philippis & Salvatore Lattanzio, 2024. "Mom's out: employment after childbirth and firm-level responses," Temi di discussione (Economic working papers) 1458, Bank of Italy, Economic Research and International Relations Area.
    21. Piotr Lewandowski & Iga Magda & Jan Baran & Olena Fedyuk & Attila Bartha, 2013. "Gender Dimensions of the Labour Markets over the Past Two Decades," IBS Working Papers 1/2013, Instytut Badan Strukturalnych.
    22. Awaworyi Churchill, Sefa & Smyth, Russell & Trinh, Trong-Anh & Yew, Siew Ling, 2022. "Local crime and fertility," Journal of Economic Behavior & Organization, Elsevier, vol. 200(C), pages 312-331.

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    More about this item

    Keywords

    fertility; employment protection; difference-in-difference; instrumental variables; policy evaluations;
    All these keywords.

    JEL classification:

    • J20 - Labor and Demographic Economics - - Demand and Supply of Labor - - - General
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J65 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment Insurance; Severance Pay; Plant Closings

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