Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform

This paper uses the Italian Social Security employer-employee panel to study the effects of the Italian reform of 1990 on worker and job flows. We exploit the fact that this reform increased unjust dismissal costs for businesses below 15 employees, while leaving dismissal costs unchanged for bigger businesses, to set up a natural experiment research design. We find that the increase in dismissal costs decreased accessions and separations for workers in small relative to large firms, especially in sectors with higher employment volatility, with a negligible impact on net employment. We also find some evidence suggesting that the reform reduced firms' entry rates and employment adjustments, but had no effect on exit rates.     

MEASUREMENT ERROR IN THE BANK OF ITALY'S SURVEY OF HOUSEHOLD INCOME AND WEALTH

This paper is aimed at evaluating the incidence of measurement error in the Bank of Italy's Survey of Household Income and Wealth (SHIW). In the case of time-invariant variables, we assess the degree of inconsistency of answers given by panel households in subsequent survey waves. For quantities that vary with time, we estimate the incidence of measurement error by decomposing observed variability into true dynamics and error-induced noise. We apply the Heise model or the latent Markov model, depending on whether the data are continuous or categorical. We also present regression models that explain the error-generating process. Our results are relevant to researchers who use SHIW data for economic analysis, but also to data producers involved in similar income and wealth surveys. The methods we describe and test can be employed in a number of contexts to gain better understanding of data-related problems and plans for survey improvement.     

Global demographic trends and social security reform

How sustainable are the current social security systems in the developed economies, given the projected demographic trends? The most recent literature has answered this question through dynamic general-equilibrium models in a closed-economy framework. This paper provides a new quantitative benchmark of analysis for this question represented by a two-region model (South and North) of the world economy where capital flows across regions. The timing and the extent of the demographic transition—and the associated economic forces shaping capital accumulation and equilibrium factor prices—are very different in the two regions. Thus, the projected paths of interest rate and wage rate in the North diverge substantially between closed and open economy. We perform a wide range of policy experiments under both scenarios. Our main conclusion is that if one is interested in quantifying the path of the fiscal variables (e.g., the value of the payroll tax) needed to keep the social security system viable or to finance a transition towards a fully funded system, then these two benchmarks yield similar results. However, if the focus is on quantifying the path of factor prices, aggregate variables and, ultimately, welfare, then the two approaches can diverge significantly.     

Aggregating risk capital, with an application to operational risk

We describe a numerical procedure to obtain bounds on the distribution function of a sum of n dependent risks having fixed marginals. With respect to the existing literature, our method provides improved bounds and can be applied also to large non-homogeneous portfolios of risks. As an application, we compute the VaR-based minimum capital requirement for a portfolio of operational risk losses. JEL Classification G20 · 60E15 · 91B30     

Costs and Structure of Technology in the Italian Water Industry

This paper analyses from an empirical point of view the technology underlying the Water industry. Firstly, we study the impact of environmental and quality factors on the production process. Secondly, different functional forms are analysed in order to represent the technology. Overall results show that the coefficient of hedonic variables are significant and that the best functional form is the transcendental logarithmic one. Finally, evidence on return to scale depends on the functional form adopted and on the inclusion ofhedonic variables.     

Comparing Digital Strategies and Social Media Usage in B2B and B2C Industries in Spain

ABSTRACT

Using 285 responses obtained in a survey of high- and middle-level managers of firms located in Spain and by implementing clustering techniques, we identify differences in the conception and adoption of a digital strategy and the use of social media. A driver for these differences is represented by whether companies are adopting a B2C or a B2B business model. Specifically, B2B companies are slower to generate an overall digital strategy compared to B2C firms. Moreover, B2B firms adopting a digital strategy are prioritizing the use of more professionally oriented platforms (e.g., LinkedIn), while B2C firms are favoring the use of more socially oriented services (e.g., Facebook). Additionally, we find that those B2C companies without a clear digital strategy are nonetheless significantly using social media, particularly social networks, while B2B companies are delaying the use of social media until conceiving a clear digital strategy.     

The selection of migrants and returnees in Romania

This paper uses census and survey data to identify the wage earning ability and the selection of recent Romanian migrants and returnees on observable characteristics. We construct measures of selection across skill groups and estimate the average and the skill‐specific premium for migration and return for three typical destinations of Romanian migrants after 1990. Once we account for migration costs, we find evidence that the selection and sorting of migrants are driven by different returns to skills in countries of destination. Our identification strategy for the effects of work experience abroad permits a cautious causal interpretation of the premium to return migration. This premium increases with migrants' skills and drives the positive selection of returnees relative to non‐migrants. Based on the compatibility of the results with rationality in the migration decisions, we simulate a rational‐agent model of education, migration and return. Our results suggest that for a source country like Romania relatively high rates of temporary migration might have positive long‐run effects on average skills and wages.     

Tariff‐tax Reforms in Large Economies

This paper studies tariff‐tax reforms in a two‐region global New Keynesian model composed of a developing and an advanced region. In our baseline calibration, a revenue‐neutral reform that lowers tariffs in developing countries can reduce domestic welfare. The reason is that the increase in developing countries welfare due to higher output is dominated by the welfare losses stemming from the deterioration of the terms of trade. On the other hand, the reform increases output and welfare in the advanced countries and in the world as a whole. The effects that we highlight have not been studied in previous contributions to the literature, which looks at tariff‐tax reforms using a small open economy framework. Nominal rigidities have important implications for adjustment dynamics in our model. In the case of a ‘point‐for‐point’ reform, for example, price stickiness implies that the international dynamics of output is reversed compared to a revenue‐neutral reform.