Dismissal costs and job contract conversion rates: the Italian CFL case


This paper uses an Italian linked employer-employee dataset to analyze the effects of dismissal costs on job contract conversion rates. In 1990, unfair dismissal costs were extended to businesses below 15 employees, while bigger businesses were unaffected by the reform. Whether this policy affected the conversion rate of the Italian “Contratto di formazione e lavoro” into permanent contracts in the same firm is ultimately an empirical question.

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Keywords: difference-in-differences; dismissal costs; job contract conversion rate

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