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The heterogeneous consequences of reduced labor costs on firm productivity
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SYSNO ASEP 0587476 Document Type V - Research Report R&D Document Type The record was not marked in the RIV Title The heterogeneous consequences of reduced labor costs on firm productivity Author(s) Del Prato, F. (FR)
Zacchia, Paolo (NHU-C) ORCIDIssue data Prague: CERGE-EI, 2024 ISSN 2788-0443 Series CERGE-EI Working Paper Series Series number 783 Number of pages 40 s. Publication form Online - E Language eng - English Country CZ - Czech Republic Keywords labor costs ; productivity ; collective bargaining Subject RIV AH - Economics OECD category Applied Economics, Econometrics Institutional support NHU-C - Cooperatio-COOP Annotation We document how a reduction in labor costs led to heterogeneous effects on the total factor productivity (TFP) of manufacturing firms. Leveraging an Italian labor legislation reform and unique institutional features of the local collective bargaining system, we show that such effects vary along the TFP distribution. Relative to the counterfactual, TFP markedly declines on the left tail, which we explain via selection mechanisms, on the right, TFP mildly increases as firms are able to expand and reallocate their workforce. To guide the evaluation of welfare implications, we develop a general equilibrium model featuring firm selection and frictions in input markets. Workplace NHU-C Contact Tomáš Pavela, pavela@cerge-ei.cz, Tel.: 224 005 122 Year of Publishing 2025 Electronic address https://www.cerge-ei.cz/pdf/wp/Wp783.pdf
Number of the records: 1