Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/282774 
Year of Publication: 
2023
Series/Report no.: 
IZA Discussion Papers No. 16647
Publisher: 
Institute of Labor Economics (IZA), Bonn
Abstract: 
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.
Subjects: 
employment protection
job insecurity
job mobility
on-the-job search
JEL: 
J22
J28
J41
J65
Document Type: 
Working Paper

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