Abstract:

In recent years, several European countries have modified their policies on fixed-term contracts, oscillating between liberalization and restriction in order to balance employment flexibility and job stability. We analyze a 2018 reform that tightened the legislation on temporary contracts in Italy, and examine its impact on wage dynamics. Our analysis, grounded in extensive administrative data covering the universe of dependent employees in Italy, reveals a sizeable decline in the starting wage of workers whose contract gets converted from fixed-term to permanent. We suggest two possible explanations for this decline. First, the new policy regime could induce changes in the composition of the pool of converters. Second, the decline in wages could be caused by a decrease in the surplus generated by each job, either through a direct increase in labor costs or through an increase in uncertainty about the quality of the worker. Our results suggest the existence of some degree of market power on the part of firms, with increased security for the workers being partly compensated by lower wages.

Abstract:

This paper examines how Italian firms use fixed-term contracts (FTCs) and documents the relative importance of seasonal needs, worker screening and buffer-stock motives. Using matched employer–employee data for 2013–2017 merged with firm-level balance-sheet information, we select a set of firms that systematically rely on temporary employment, generating over 85 per cent of its total volume. By focusing on these firms, we show that two ex ante contract features — the seasonal label and the initial duration — are highly informative about firms’ hiring intentions. Use of seasonal contracts is limited and concentrated in a narrow set of sectors, while longer initial durations strongly predict conversion into permanent jobs, reflecting screening behaviour driven mainly by firm-specific factors. In contrast, most FTCs are short, non-seasonal and concentrated in firms dealing with lower productivity and higher revenue volatility, consistent with buffer-stock adjustment. A clustering exercise confirms that about 10 per cent of firms predominantly use seasonal contracts, one fourth use FTCs for screening, and roughly 65 per cent rely on them to manage uncertainty. 

Abstract:

This paper assesses the economic significance of multinational enterprises (MNEs) operating in Italy's private non-farm and non-financial sectors. Using a new database that integrates various data on firm ownership and activity over the 2010-22 period, we highlight the key characteristics of MNEs, including employment, value added, productivity, innovation capacity, and wages.

Multinational enterprises (MNEs) generate over 35% of total value added and employ roughly one-fifth of all workers in Italy. They are larger and more productive than non-multinational firms, even after accounting for differences in sectoral and geographical specialization, and offer significantly higher wages. MNEs have contributed more than proportionately to the growth in firm size observed in Italy over the past decade and are found to be more innovative and export-oriented.