Reforms, labour market functioning and productivity dynamics: a sectoral analysis for Italy

Cecilia Iona () and Giovanna Vallanti
Additional contact information
Cecilia Iona: Istat and Luiss Lab
Authors registered in the RePEc Author Service: Cecilia Jona-Lasinio

No 1193, Working Papers LuissLab from Dipartimento di Economia e Finanza, LUISS Guido Carli

Abstract: Over the last two decades Italy registered notable improvements in the functioning of labour market. However, such improvements have been accompanied by a deterioration in terms of productivity and competitiveness. This paper provides some evidence in this respect evaluating to what extent labour market reforms might have influenced the poor productivity performance of the Italian economy over the period 1980-2008. We show that labour market deregulation had a negative effect on aggregate labour productivity through both the within and the reallocative components. Our results show that the increased flexibility in the use of temporary contract has led to a lower productivity (level and to a lesser extent growth rate) in all sectors, with a higher impact on those industries with a higher flexibility need. Conversely, the use of temporary contracts has a significant lower effect in industries with higher skill content. The negative effect of the reforms on the reallocative capacity is stronger in those industries with a higher flexibility need that are also the relatively lower productivity sectors in the period 1993-2008.

Keywords: Productivity; Growth; Labour Market Institutions (search for similar items in EconPapers)
JEL-codes: J08 J23 J24 (search for similar items in EconPapers)
Date: 2011
New Economics Papers: this item is included in nep-eff, nep-eur and nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Working Paper: Reforms, labour market functioning and productivity dynamics: a sectoral analysis for Italy (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:lui:lleewp:1193

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