Finanziamento UE – NextGenerationEU PRIN 2022 "Job Safety, Globalization and Labor Market Institutions" PNRR M4C2 investimento 1.1 Avviso 104/2022

This project aims at investigating the effects of import competition (IC), outsourcing, and decreases in Employment Protection Legislation (EPL) on pecuniary and non-pecuniary labour market outcomes with a particular focus on workplace safety. These factors contribute to shaping the working conditions faced by heterogeneous workers. Globalization by tightening the competition should lead to the selection of the most productive firms and should force the least productive out of the industry. To the extent that rent sharing is present in the surviving firms, increased competition should leave only the occupations with the best working conditions. Nevertheless, cost-saving strategies may lead less competitive firms to reduce investments in workplace safety. The threat of firm closure and the recent reductions of EPL may lower workers’ bargaining power and force them to accept a reduction in job quality. In Italy, where wages are compressed and downward rigid, a measurement of job quality based only on wages may neglect sizable effects in terms of other amenities. An analysis of workplace safety may reveal a worsening in working conditions. Indeed, despite binding minimum contractual wages, the number of workplace injuries in Italy has remained dramatically high, both during downturns and, as the recent evidence is showing, also during recovery periods. In recent decades, another phenomenon may have contributed to changing the working conditions: the increase in outsourcing may have shifted hazardous tasks to smaller and less productive subcontracting firms, where lower investment in workplace safety may increase the number of injuries. Both the reorganization of tasks outside firms’ boundaries and firms’ reactions to trade and other shocks strongly motivate an analysis comparing the changes in the flows of products determining the input-output structure of the economy with the reallocation of workers between sectors. Such investigation will identify i) the sectors that have undergone the most radical transformation; ii) those industries and firms that have been hit hardest by competition; iii) the conditions that favor the reallocation of workers. This analysis will also put under scrutiny the identification assumptions on which the estimators used to study impact of IC and the effect of reductions in EPL are based. Both studies will perform a detailed heterogeneity analysis on workers’ and firms’ characteristics to identify the categories most affected by these changes in IC and EPL. Up-to-date econometric techniques borrowed from the policy evaluation literature will be used, such as:1) regression discontinuity design; 2) shift-share instruments following the recent contributions and diagnosis tests proposed on Bartik instruments (Borusyak et al., 2022; and Goldsmith-Pinkham et al., 2020); 3) machine learning techniques to identify subgroups which are particularly responsive to the treatments (Athey et al, 2019; Chernozhukov et al., 2020).