Turnover costs in Italy: some preliminary evidence

Abstract

The paper addresses the issue of adjustment costs of employment. A new panel of about 290,000 Italian firms, drawn from the Social Security files, is used. Figures on employment are monthly, from 1985:1 to 1990:12, and cut across all sizes and sectors of the economy. Three hypotheses on adjustment costs have been considered: no cost, quadratic and fixed costs. Both parametric and non-parametric tests have been carried out to discriminate between the different models. Results are still provisional. However, it clearly emerges that adjustment costs exist and are relevant, especially among large firms. As to their shape, most statistics support the notion of fixed costs.