Lost in deflation: Why Italy’s woes are a warning to the whole Eurozone

Using macroeconomic data for 1960-2018, this paper analyzes the origins of the crisis of the ‘post-Maastricht Treaty order of Italian capitalism’. After 1992, Italy did more than most other Eurozone members to satisfy EMU conditions in terms of self-imposed fiscal consolidation, structural reform and real wage restraint — and the country was...

Labor Laws and Manufacturing Performance in India: How Priors Trump Evidence and Progress Gets Stalled

Strong labor protections for ordinary workers are often portrayed as a `luxury developing countries cannot afford`. No study has been more influential in propagating this perversity trope in the context of the Indian economy than the QJE article of Besley and Burgess (2004). Their article provides econometric evidence that pro-worker regulation...

Flexible labor and innovation performance: Evidence from longitudinal firm-level data

Firms with high shares of workers on fixed-term contracts have significantly higher sales of imitative new products but perform significantly worse on sales of innovative new products (“first on the market”). High functional flexibility in “insider-outsider” labor markets enhances a firm’s new product sales, as do training efforts and highly...