Revisiting the Effects of Enhanced Flexibility on the Italian Labour Market

d'Agostino, Giorgio and Pieroni, Luca and Scarlato, Margherita (2015): Revisiting the Effects of Enhanced Flexibility on the Italian Labour Market.

Abstract

In this paper, we assess the effects of the Italian labour market reforms which began in 2001 and which led to widespread deployment of temporary work contracts. Using a hitherto unexploited administrative dataset of work histories for the period 2003-2010, we estimate transition probabilities in the states of non-employment and employment and find a small positive effect on job creation, imputed to the reforms. Estimates also indicate a large increase in transitions to temporary contracts, which offset the reduction in permanent employment flows, although transition probabilities for men and women explain little heterogeneity. While we do find a substitution effect of the reforms on the transition between temporary and permanent contracts, the increased probability of being employed in temporary jobs mostly involved young people and workers in the depressed areas of the south of Italy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Labour market policy; Atypical contract; Panel data; Inverse probability of weighting estimator
• Subjects: C - Mathematical and Quantitative Methods > C3 - Multiple or Simultaneous Equation Models ; Multiple Variables > C33 - Panel Data Models ; Spatio-temporal Models; J - Labor and Demographic Economics > J4 - Particular Labor Markets > J41 - Labor Contracts; J - Labor and Demographic Economics > J5 - Labor-Management Relations, Trade Unions, and Collective Bargaining > J58 - Public Policy; J - Labor and Demographic Economics > J6 - Mobility, Unemployment, Vacancies, and Immigrant Workers > J64 - Unemployment: Models, Duration, Incidence, and Job Search

References

Barbieri, G. and Scherer, S. (2009), ‘Labor market flexibilisation and its consequences in Italy’, European Sociological Review 25(6), 677–692.

Berton, F., Devicienti, F. and Pacelli, L. (2011), ‘Are temporary jobs a port of entry into permanent employment? Evidence from matched employer-employee data’, International Journal of Manpower 32(8), 879–899.

Blanchard, O. and Landier, A. (2002), ‘The perverse effects of partial labour market reform: fixed– term contracts in France’, Economic Journal 112(480), F214–F244.

Boeri, T. and Garibaldi, P. (2007), ‘Two tier reforms of employment protection: a honeymoon effect?’, Economic Journal 117(521), 357–385.

Bruno, G. S. F., Caroleo, F. E. and Dessy, O. (2012), Stepping stones versus dead end jobs: exits from temporary contracts in Italy after the 2003 reform, IZA Discussion Papers 6746, Institute for the Study of Labor (IZA).

Cahuc, P., Charlot, O. and Malherbet, F. (2012), Explaining the spread of temporary jobs and its impact on labor turnover, IZA Discussion Papers 6365, Institute for the Study of Labor (IZA).

Cappellari, L., Dell’Aringa, C. and Leonardi, M. (2012), ‘Temporary employment, job flows and productivity: A tale of two reforms’, Economic Journal 122(562), 188–215.

Centeno, M. and Novo, A. A. (2012), ‘Excess worker turnover and fixed-term contracts: Causal evidence in a two-tier system’, Labour Economics 19(3), 320–328.

Dolado, J. J., Garcia-Serrano, C. and Jimeno, J. F. (2002), ‘Drawing lessons from the boom of temporary jobs in Spain’, Economic Journal 112(721), 270–295.

Emsley, R, Lunt, M., Pickles, A. and Dunn, G. (2008), ‘Implementing double-robust estimators of causal effects’, Stata Journal 8(3), 334–353.

Estevao, M. (2003), Do active labor market policies increase employment?, IMF Working Papers 03/234, International Monetary Fund.

Forlani, A. (2008), Sarà Lavoro: proposta per un sistema di archivi per analisi sul lavoro, chapter Il casellario delle posizioni previdenziali attive, pp. 109–112.

French, E. and Bailey, J. J. (2011), ‘The effects of health insurance and self-insurance on retirement behavior’, Econometrica 79(3), 693–732.

Gagliarducci, S. (2005), ‘The dynamics of repeated temporary jobs’, Labour Economics 12(4), 429– 448.

Giannelli, G., Jaenichen, U. and Villosio, C. (2012), ‘Have labour market reforms at the turn of the millennium changed the job and employment durations of new entrants? a comparative study for Germany and Italy’, Journal of Labour Research 33(2), 143–172.

Guell, M. and Petrongolo, B. (2007), ‘How binding are legal limits? Transitions from temporary to permanent work in Spain Labour Economics’, Labour Economics 14(2), 153–183.

Haltiwanger, J., Scarpetta, S. and Schweiger, H. (2014), ‘Cross country differences in job reallocation: The role of industry, firm size and regulations Labour Economics’, Labour Economics 26, 11–25.

Ichino, A., Mealli, F. and Nannicini, T. (2005), ‘Temporary work agencies in Italy: a springboard toward permanent employment?’, Giornale degli Economisti 64(1), 1–27.

Ichino, A., Mealli, F. and Nannicini, T. (2008), ‘From temporary help jobs to permanent employment: what can we learn from matching estimators and their sensitivity?’, Journal of Applied Econometrics 23(3), 305–327.

Kugler, A.and Pica, G. (2008), ‘Effects of employment protection on worker and job flows: Evidence from the 1990 Italian reform ’, Labour Economics 15(1), 78–95.

Lechner, M., Miquel, R. (2010), ‘Identification of the effects of dynamic treatments by sequential conditional independence assumptions’, Empirical Economics 39, 111–137.

Leon, S., Tsiatis, A.A. and Davidian M. (2003), ‘Semiparametric efficient estimation of treatment effect in a pretest-posttest study’, Biometrics 59, 1046–1055.

Mourougane, A. and Vogel, L. (2009), ‘Speed of adjustment to selected labour market and tax reforms’, Comparative Economic Studies 51(4), 500–519.

Picchio, M. (2008), ‘Temporary contracts and transitions to stable jobs in Italy’, LABOUR 22(s1), 147–174.

Picchio, M. and Staffolani, S. (2013), Does apprenticeship improve job opportunities? A regression discontinuity approach, IZA Discussion Papers 7719, Institute for the Study of Labor (IZA).

Robins, J. M., Hernan, M. A. and Brumback, B. (2000), ‘Marginal structural models and causal inference’, Epidemiology 11, 550–560.

Tsiatis, A. A. (2006), Semiparametric theory and missing data, New York: Springer.

Vander Weele, T. J. and Vansteelandt, S. (2009), ‘Conceptual issues concerning mediation, interventions and composition’, Stat Interface 2, 457–468.