The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation

Abstract

Employment protection systems are known to generate significant distortions in firms' hiring and firing decisions. We know much less about the impact of these regulations on workers behaviour. The goal of this Paper is to fill in this gap and in particular to assess whether the provision of employment protection induces more absenteeism among workers. Our analysis is based on weekly observations for the 858 white-collar workers hired by a large Italian bank between January 1993 and February 1995. These workers begin to be protected against firing only after the twelfth week of tenure and we observe them for one year. We show that the number of day's absence per week more than doubles once employment protection is granted. This result offers a preliminary but robust piece of evidence to evaluate a consequence of employment protection systems that has been relatively neglected in the policy debate in Europe.