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The Unintended Consequences of Italy's Labour Laws: How Extensive Labour Regulation Distorts the Italian Economy

18 Pages Posted: 7 Jun 2013  

Matthew M. Melchiorre

Competitive Enterprise Institute (CEI)

Emilio Rocca

Istituto Bruno Leoni

Date Written: June 2013

Abstract

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.

Keywords: employment protection legislation, firm expansion, irregular employment, Italy, labour regulation

JEL Classification: D21, J00, K31

Suggested Citation

Melchiorre, Matthew M. and Rocca, Emilio, The Unintended Consequences of Italy's Labour Laws: How Extensive Labour Regulation Distorts the Italian Economy (June 2013). Economic Affairs, Vol. 33, Issue 2, pp. 156-173, 2013. Available at SSRN: https://ssrn.com/abstract=2275731 or http://dx.doi.org/10.1111/ecaf.12012

Matthew M. Melchiorre (Contact Author)

Competitive Enterprise Institute (CEI) ( email )

1899 L St. NW
12th Floor
Washington, DC 20036
United States

Emilio Rocca

Istituto Bruno Leoni ( email )

via Bossi 1
Turin
Italy

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