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Flexibility Policies and Re-employment Probabilities in Italy

Chiara Mussida and Dario Sciulli

The B.E. Journal of Economic Analysis & Policy, 2015, vol. 15, issue 2, 621-651

Abstract: We analyze the effects of Italian labor market reforms “at the margin” on the probability of exiting from non-employment and entering permanent and temporary contracts, using WHIP data for the period 1985–2004. We find that the reforms have strengthened the duration dependence parameter, meaning a stronger labor market gap in employment opportunities between the short- and long-term non-employed. We suggest that in a flexible labor market, long-term unemployment is used by firms as a screening device to detect less productive workers. We also find evidence of greater differences in employment opportunities according to gender, and of reduced differences between regional labor markets.

Date: 2015
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DOI: 10.1515/bejeap-2013-0180

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