Institutional rigidities and employment rigidity on the Italian labour larket

Rebeca Jiménez-Rodríguez and Giuseppe Russo

MPRA Paper from University Library of Munich, Germany

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.

Keywords: Labour market regulation; institutions; volatility; breaks (search for similar items in EconPapers)
JEL-codes: C22 J23 (search for similar items in EconPapers)
Date: 2007-07
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Related works:
Journal Article: Institutional Rigidities and Employment Rigidity on the Italian Labour Market (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:5758

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