Paper Title
EMPLOYMENT PROTECTION LEGISLATION AND THE INTERNATIONALIZATION OF SMEs

Abstract
Abstract - We study the effect of a reduction in employment protection on the internationalization of small firms. Exploiting a comprehensive survey on the Italian firms, we assess how small firms’ engagement in international activities has been affected by the 2012 Labor Market Reform, the so-called “Fornero Law”, that reduced firing costs for firms above the 15-employee threshold. Using a difference-in-differences identification strategy, we find a positive effect of EPL retrenchment on both small firms’ inward and outward FDI, whereas we are not able to identify an effect on their exporting activities. JEL No. J08, J63, F16, F21 Keywords - Internationalization, FDI, Small Firms, Labor Market Reform, Difference-In-Differences