Institutional rigidities and employment rigidity on the Italian labour larket

Jiménez-Rodríguez, Rebeca and Russo, Giuseppe (2007): Institutional rigidities and employment rigidity on the Italian labour larket.

Abstract

A well-established result in the theoretical literature on labour market flexibility is that the employment should be more volatile in "flexible" labour markets. Over the last 35 years, Italy gives a good example of a transition from an over-regulated labour market into a quite more flexible one. According to the theory, the deregulation is expected to increase the employment variance. Despite the anecdotal evidence reported in the press, the literature hardly finds any evidence for such an effect. This paper exploits time-series of several employment indicators since 1980, allowing us to compare decades with different labour market regulation. All the considered series show evidence of a structural break with an increase in their variance after the deregulation, confirming the expected pattern. This gives some support to the concerns for increased job insecurity.

• Item Type: MPRA Paper
• Institution: Department of Economics, University of Salamanca; Department of Economics and Statistics, University of Salerno.
• Language: English
• Keywords: Labour market regulation; institutions; volatility; breaks
• Subjects: J - Labor and Demographic Economics > J2 - Demand and Supply of Labor > J23 - Labor Demand; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C22 - Time-Series Models ; Dynamic Quantile Regressions ; Dynamic Treatment Effect Models ; Diffusion Processes

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