%0 Report
        %A Leonardi, Marco
%A Pica, Giovanni
        %T Who Pays for It? The Heterogeneous Wage Effects of Employment Protection Legislation
        %D 2010
        %8 2010 Nov
        %I Institute of Labor Economics (IZA)
        %C Bonn
        %7 IZA Discussion Paper
        %N 5335
        %U https://www.iza.org/publications/dp5335
        %X Theory predicts that the wage effects of government-mandated severance payments depend on workers' and firms' relative bargaining power. This paper estimates the effect of employment protection legislation (EPL) on workers' individual wages in a quasi-experimental setting, exploiting a reform that introduced unjust-dismissal costs in Italy for firms below 15 employees and left firing costs unchanged for bigger firms. Accounting for the endogeneity of the treatment status, we find that high-bargaining power workers (stayers, white collar and workers above 45) are almost left unaffected by the increase in EPL, while low-bargaining power workers (movers, blue collar and young workers) suffer a drop both in the wage level and its growth rate.
        %K endogeneity of treatment status
%K policy evaluation
%K severance payments
%K costs of unjust dismissals