Absenteeism, Unemployment and Employment Protection Legislation: Evidence from Italy

38 Pages Posted: 8 Jan 2013 Last revised: 3 Mar 2014

See all articles by Vincenzo Scoppa

Vincenzo Scoppa

Università degli Studi della Calabria - Department of Economics and Statistics

Daniela Vuri

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

Multiple version iconThere are 3 versions of this paper

Date Written: January 7, 2013

Abstract

Efficiency wages theories argue that the threat of ring, coupled with a high unemployment rate, is a mechanism that discourages employee shirking in asymmetric information contexts. Our empirical analysis aims to verify the role of unemployment as a worker discipline device, considering the different degree of job security offered by the Italian Employment Protection Legislation to workers employed in small and large firms. We use a panel of administrative data (WHIP) and consider sickness absences as an empirical proxy for employee shirking. Controlling for a number of individual and firm characteristics, we investigate the relationship between worker's absences and local unemployment rate (at the provincial level). We find a strong negative impact of unemployment on absenteeism rate, which is considerable larger in small firms due to a significantly lower protection from dismissals in these firms. We also find that workers who are absent more frequently face higher risks of dismissal. As an indirect test of the role of unemployment as worker's discipline device we show that public sector employees, almost impossible to fire, do not react to the local unemployment.

Keywords: Shirking, Absenteeism, Employment Protection Legislation, Unemployment

JEL Classification: J41, M51, J45

Suggested Citation

Scoppa, Vincenzo and Vuri, Daniela, Absenteeism, Unemployment and Employment Protection Legislation: Evidence from Italy (January 7, 2013). CEIS Working Paper No. 257. Available at SSRN: https://ssrn.com/abstract=2197235 or http://dx.doi.org/10.2139/ssrn.2197235

Vincenzo Scoppa

Università degli Studi della Calabria - Department of Economics and Statistics ( email )

via Ponte Bucci
Arcavacata di Rende, Cosenza 87036
Italy

Daniela Vuri (Contact Author)

University of Rome Tor Vergata ( email )

Via di Tor Vergata
Rome, Lazio 00133
Italy

IZA Institute of Labor Economics

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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