[PEN-L:27289] RE: Re: Italian labor

["Devine, James" <jdevine@xxxxxxx>]

Title: RE: [PEN-L:27288] Re: Italian labor

Michael Perelman: > I was surprised by this article.  Krueger is usually fairly  middle of the road, but this seemed decidedly to the right.  He did have a short  indication that the right to fire might be more acceptable if workers had a safety net, but he did not mention at the current Italian gov't would not be very likely to strengthen any safety nets.<

NC economists typically don't report on the political leanings of any government. It's not part of what they do.

I think we should face the fact that under capitalism, restricting the bosses' right to fire (1) discourages them from hiring new people, all else constant, since it makes hiring more like a long-term investment; and (2) encourages worker absenteeism and the like, all else constant.

But (1) may actually be beneficial in a way: if macro-policy is aimed at keeping the unemployment low, the reluctance to hire may keep businesses small, so we don't see as many megacorporations. Of course, we can't expect full-employment policies from Berlusconi.

Point (2) may also be beneficial in a way, in that absenteeism may actually increase the productivity of workers. Absenteeism may prevent diminishing returns due to over-work. Further, employers have to use "carrots" to motivate workers, rather than using the "stick" of firing. A lot of studies indicate that positive rewards work better. Back when U.S. workers had more job security, in the 1950s & 1960s, labor productivity growth was higher than nowadays. But Krueger doesn't give any data or even a hint of data about how well Italy does by productivity standards.

any other thoughts? does the above make sense?

(BTW, Tom, I am not praising productivity standards. But in a capitalist world, a country that does well by these standards is more likely to prosper.)

Jim Devine