Employment Protection and Fertility: Evidence from the 1990 Italian Reform

No 6608, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: policy evaluations; instrumental variables; difference-in-difference; employment protection; fertility (search for similar items in EconPapers)
JEL-codes: J13 J2 J65 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2012-05
New Economics Papers: this item is included in nep-dem, nep-eur and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Published - published in: Labour Economics, 2013, 23, 77-88

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Related works:
Journal Article: Employment protection and fertility: Evidence from the 1990 Italian reform (2013)
Working Paper: Employment Protection and Fertility: Evidence from the 1990 Italian Reform (2013)
Working Paper: Employment Protection and Fertility: Evidence from the 1990 Italian Reform (2012)
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