Market power, productivity and the EU Single Market Program: Evidence from a panel of Italian firms

Article Abstract:

This paper provides empirical evidence on the impact the EU Single Market Program has exerted on market power and total factor productivity in a large sample of Italian firms. Both market power and total factor productivity are estimated by applying several extensions of the methodology developed by Hall. Main findings can be summarised as follows. Firstly, for the sample of `1992 most sensitive' firms market power decreases by 50% in the SMP implementation period compared to previous years, whereas no clear pattern emerges for the other sub-samples of firms. Secondly, and less conclusively, only for the sub-sample of `1992 most sensitive' firms a positive transitory shock to productivity growth rates is observed immediately after the announcement of the reform project. Overall, these results are consistent with the long standing view that economic integration reduces firms' market power and increases productivity via the removal of non-tariff barriers. Jel classification: L1; O3; F1 Keywords: Market power; Productivity; Integration; Europe

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Firing costs and stigma: a theoretical analysis and evidence from microdata

Article Abstract:

This paper studies the effects of firing costs when there is imperfect information about worker productivity. We argue that firing costs affect the way in which firms form expectations about worker productivity from their employment history. In addition to the standard effect of firing costs, our model shows that a firing tax increases the stigma suffered by dismissed workers, reducing their re-employment prospects. On the other hand, firing costs raise firms' hiring standards, and the expected productivity of those who have never been hired improves. Using microdata on labor market transitions, we test and confirm the model's prediction that firing costs reduce re-employment prospects of dismissed workers by increasing the stigma associated with job loss. JEL classification: D83; E24; J65 Keywords: Imperfect information; Firing costs; Stigma; Unemployment

Brief Article

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Saving behavior and wealth accumulation in a pure lifecycle model with income uncertainty

Article Abstract:

Several models of economic behavior currently compete for an explanation of individual wealth accumulation and savings patterns. In this paper we focus in particular upon the role of income uncertainty, and the role played by a retirement period, during which time-expected earnings are zero. We find that income uncertainty can alter savings patterns over the lifecycle significantly, with the greatest influence on the wealth of young individuals. However, its influence on the aggregate stock of wealth is less than earlier theoretical work indicates. [C] 2001 Elsevier Science B.V. All rights reserved. JEL classification: E21; E25; E60 Keywords: Wealth accumulation; Income uncertainty; Precautionary saving; Retirement

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