The impact of unions on labour turnover in Italy:: Evidence from establishment level data

Abstract

Empirical studies of labour turnover have an important role in explaining the functioning of labour markets, shedding light on the process of matching workers to firms and on the nature of the employment relationship. Turnover patterns have important implications for wage determination, work organisation, career prospects and the accumulation of firm-specific human capital. Less attention has been paid in the literature to the impact of unions on firms' accession–separation decisions. Union practices, however, are deemed to have a significant impact on the turnover rate of firms, influencing both hiring and quits–dismissals decisions. This paper attempts to explore union effects on turnover. After briefly discussing the main theoretical implications for the analysis of accessions and separations rates within the establishment, we highlight some institutional features of the Italian labour market. The empirical model is then specified and estimated using establishment level data for the Italian metal-mechanical engineering industry. In the attempt to ascertain the different routes through which union presence affects turnover rates, a different treatment of the various sources of separations (quits, separations with incentives, dismissals), is proposed. Empirical evidence suggests that Italian trade unions have succeeded in reducing turnover.