Original title: The heterogeneous consequences of reduced labor costs on firm productivity
Authors: Del Prato, F. ; Zacchia, Paolo
Document type: Research reports
Year: 2024
Language: eng
Series: CERGE-EI Working Paper Series, volume: 783
Abstract: 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.
Keywords: collective bargaining; labor costs; productivity

Institution: Economics Institute AS ČR (web)
Document availability information: Fulltext is available at external website.
External URL: https://www.cerge-ei.cz/pdf/wp/Wp783.pdf
Original record: https://hdl.handle.net/11104/0354641

Permalink: http://www.nusl.cz/ntk/nusl-621035


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