Laws designed to force companies to give workers permanent contracts actually resulted in lower wages for those workers.
March 31, 2026
Original Paper
Dignity by Decree? The Employment and Wage Effects of Restricting Fixed-Term Contracts
SSRN · 6468880
The Takeaway
Italy's 'Dignity Decree' successfully pushed firms to convert temporary jobs into permanent ones, but the trade-off was a 'sizeable decline' in pay. It suggests that job security and high wages may be a zero-sum game in certain regulatory environments.
From the abstract
<span>The Dignity Decree was a 2018 reform aimed at restricting the use of fixed-term contracts in the Italian labor market. We examine how this regulatory intervention affected firm-level employment dynamics and worker wages. We find negligible disemployment effects and a significant shift in contract composition: firms more exposed to the reform substantially reduced their use of fixed-term contracts, offsetting the decrease with an increase in permanent employment, primarily through the conve