Abstract

http://ssrn.com/abstract=2052889
 


 



Employment Protection and Fertility: Evidence from the 1990 Italian Reform


Ervin Prifti


University of Rome II

Daniela Vuri


University of Rome Tor Vergata; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

April 30, 2012

CESifo Working Paper Series No. 3805

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.

Number of Pages in PDF File: 31

Keywords: fertility, employment protection, difference-in-difference, instrumental variables, policy evaluations

JEL Classification: J200, J130, J650

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Date posted: May 7, 2012  

Suggested Citation

Prifti, Ervin and Vuri, Daniela, Employment Protection and Fertility: Evidence from the 1990 Italian Reform (April 30, 2012). CESifo Working Paper Series No. 3805. Available at SSRN: http://ssrn.com/abstract=2052889

Contact Information

Ervin Prifti
University of Rome II ( email )
Via di Tor Vergata
Rome, 00133
Italy
Daniela Vuri (Contact Author)
University of Rome Tor Vergata ( email )
Via di Tor Vergata
Rome, 00133
Italy
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute for Economic Research)
Poschinger Str. 5
Munich, DE-81679
Germany
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