THE IMPACT OF UNIONS ON LABOR TURNOVER IN ITALY - EVIDENCE FROM ESTABLISHMENT LEVEL DATA

Empirical studies of labour turnover have an important role in explain ing the functioning of labour markets, shedding light on the process o f matching workers to firms and on the nature of the employment relati onship. Turnover patterns have important implications for wage determi nation, work organisation, career prospects and the accumulation of fi rms specific human capital. Less attention has been paid in the litera ture 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-dismissa ls decisions. This paper attempts to explore union effects on turnover . After briefly discussing the main theoretical implications for the a nalysis 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 establishme nt level data for the Italian metal-mechanical engineering industry. I n the attempt to ascertain the different routes through which union pr esence affects turnover rates, a different treatment of the various so urces of separations (quits, separations with incentives, dismissals), is proposed, Empirical evidence suggests that Italian trade unions ha ve succeeded in reducing turnover. (C) 1998 Elsevier Science B.V.