"Heterogeneous Costs of Job Loss When Employment Protection Is Eroded" 

(Marco Francesconi, Daniela Sonedda)

We use detailed Italian administrative matched employer-employee data to estimate the cost of job loss in the entire re-hiring market taking advantage of a 2012 reform, which eroded employment protection to workers hired on permanent employment contracts. Exploiting the staggered nature of the process of job loss among workers over time, we find large costs of job termination. Weakening employment protection led to additional penalties in terms of lower re-hiring earnings and lower re-employment probabilities. Laid-off workers were not more severely penalized than others. Heterogeneous impacts on outcomes deepened pre-existing divides in the labor market.