The Unintended Consequences of Italy's Labour Laws: How Extensive Labour Regulation Distorts the Italian Economy
Matthew M. Melchiorre
Competitive Enterprise Institute (CEI)
Istituto Bruno Leoni
Economic Affairs, Vol. 33, Issue 2, pp. 156-173, 2013
Simple solutions to complex problems often have unintended and undesirable consequences. An example is Italy's approach to combating unemployment. Rigid laws designed to protect the employed perversely discourage businesses from hiring and people from working. They also encourage precarious temporary employment among young people, informal work, and under‐the‐table deals that compromise worker benefits. The numbers of Italy's unemployed and of those outside the workforce are much higher than official estimates suggest. Italy's employment protection legislation – arguably the most restrictive in Europe – creates that which it seeks to prevent: the insecurity of unemployment.
Number of Pages in PDF File: 18
Keywords: employment protection legislation, firm expansion, irregular employment, Italy, labour regulation
JEL Classification: D21, J00, K31Accepted Paper Series
Date posted: June 7, 2013
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