Abstract
Many European countries during the 1990s and early 2000s tried to raise labor market flexibility by relaxing their employment protection legislation. This paper investigates whether the reforms have influenced job and employment stability for labor market entrants in Germany and Italy. Duration models are estimated using comparable administrative data for the two countries. The results provide, to some extent, evidence of a decrease in job stability. However, this is not accompanied by a compensating increase in employment stability during the first 3 years after labor market entry.
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Notes
Temporary work agencies “loan” temporary workers to firms. The maximum duration of the contract between the temporary work agency “loaning the worker” and the firm who “borrows” the worker is ruled by law. In Germany, the maximum number of months these contracts can last has been changed several times. See Table 1.
An objective reason is typically given in a situation in which fixed-term work is used to meet temporary labor demand, such as time-limited projects or the replacement of an employee on maternity leave.
The numbers of successful placements in the official statistics of the Federal Employment Services have proven to be exaggerated.
CGIL, CISL and UIL. For example the bargained percentage was 10% in the collective contract for metal workers signed in 1998.
See the decree with the force of law n. 303 10th September 1991.
Law 197/1997, named after then Minister of Labor Tiziano Treu.
Named after Marco Biagi, an Italian labor lawyer and expert in industrial relations murdered by terrorists in 2002.
The IABS also contains data on unemployment benefit receipt drawn from the Federal Employment Agency, which is however not used in this paper.
The data is managed by LABORatorio Revelli thanks to an agreement between the INPS and the University of Torino.
Such as, for example, “mobility” benefits, namely, unemployment benefits ruled by Law 1991 n.223 for dismissed employees.
Other public sector employees are included. The status of Beamte is a special feature of public services in Germany. Beamte are traditionally seen as representatives of the state, they are usually life-time employed—without unemployment insurance—and have pensions paid out of the public budget.
The term “mini-jobs” is used for jobs with a regular working time below a certain threshold of hours per week, jobs with earnings below a certain monthly wage and jobs lasting only a short period. After 1999, these jobs have been made subject to (some) social security payments and now are included in the administrative data.
However, from 1996 onwards, also freelance workers without any other security fund and coordinated and continuous collaborators (co.co.co—see section on Institutional Background) have been included.
The duration of such training periods is usually between two and four years and is determined by special regulations for each occupation. The vocational trainees do not receive a wage, but instead are paid an allowance, which is much lower than the normal wage. After vocational training, a further employment of a trainee—even if in the same firm—requires a new labor contract.
Apprentices receive a minimum amount of external and on the job training and the employer enjoys a full social security contributions rebate. Its maximum duration is 5 years and is not renewable within the same firm. Only individuals under 24 years of age can be hired with this contract. The training contract “formazione e lavoro” can last a maximum of 24 months and is not renewable within the same firm. Only individuals under 32 years of age can be hired with this contract. It provides to the firm 25% to almost 100% rebate on the social security contributions, and to the worker a minimum of formal training.
Durations are measured in days for Germany, and in months for Italy. The descriptive results are presented in months for both countries.
A sensitivity analysis shows that setting the length of the interruption to one month does not change the results significantly.
For Germany, separate estimations for West and East Germany have been performed. For space reasons and in order to not overload the presentation, only the results for West Germany are presented. Also, biographies for persons in East Germany are more likely to be incomplete because of the lack of employment information before reunification (see section on Data).
This result is not in line with the common belief that, in Italy, it was the Treu law in 1997 that started the flexibilization process. Contini and Grand (2009), using the same data set, find similar evidence on this point.
Temporary agency work is in fact controlled for (see Table 5). Temporary agency work contracts as opposed to permanent ones have much higher hazard ratios, as expected.
Wages are not included among the regressors because of endogeneity. The specification is a reduced form, and therefore all the variables determining wages available in the data set are included.
In Italy part time jobs, although well protected, are scarcely available.
Note that one-job employment spells and the last job of multiple-jobs employment spells might be censored or might end in unemployment.
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Acknowledgements
In July 2009 we presented this paper at the ILO-RDW conference on “Regulating for Decent Work—Innovative labor regulation in a turbulent world” in Geneva. We wish to thank Janine Berg, Sandrine Cazes and all the participants for their helpful suggestions. We also wish to thank Alfonso Arpaia, Simone Bertoli, Marco Caliendo, Bruno Contini, Riccardo Del Punta, Debra Hevenstone, Frauke Kreuter, Anton Nivorozhkin, Lia Pacelli, Matteo Picchio, Jennifer Sinibaldi, Joachim Wolff and two anonymous referees for their useful comments. A visiting fellowship in July 2008 at DG Economic and Financial Affairs in Brussels to develop this research project is gratefully acknowledged.
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Giannelli, G.C., Jaenichen, U. & Villosio, C. Have Labor Market Reforms at the Turn of the Millennium Changed the Job and Employment Durations of new Entrants?. J Labor Res 33, 143–172 (2012). https://doi.org/10.1007/s12122-011-9123-8
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DOI: https://doi.org/10.1007/s12122-011-9123-8
Keywords
- Job and employment stability
- Flexibility
- Labor market reforms
- Duration analysis
- Mixed proportional hazard
- Germany
- Italy