Making the italian labor market more flexible: an evaluation of the treu reform

The Treu Law introduced temporary contracts and extended the applicability of fixed-term contracts in order to increase the flexibility of the labour market and to reduce unemployment. The paper inquires whether the reform has affected the duration dependence related to the out-flow from non-employment, how previous atypical contract experiences affect the probability of finding a stable job and if the probability of flowing toward a permanent contract is higher moving from a non-working state rather than from an atypical job. Applying a Mixed Proportional Hazard (MPH) model with competing risk to a sub-sample drawn from the WHIP dataset, I estimate the hazard rate for the state transitions. My main findings predict an increase in negative duration dependence for non-working state out-flow, meaning an amplification of the short-term unemployed - long-term unemployed duality. It is a consequence of the larger use of atypical contracts, that would provide a screening instrument for the hiring choices of firms. Previous atypical job experiences play a negative effect on the probability of moving toward a stable job if the origin state is a non-working condition, while they have a positive role in the transition toward an atypical job. Besides, there is no evidences that the probability of finding a permanent contract is higher for workers who move from an atypical contract rather from a non-working state. Finally, a human capital accumulation effect is found to explain the transition toward a stable job. Policy recommendations include promotion of longer contracts, implementation of training programs and services to facilitate job-search

Child Social Maladjustment and Adult Employment Dynamics

This paper investigates the effect of social maladjustment at age 11 on adult employment probability. Social maladjustment is measured according to the British Social Adjustment Guide score provided by the National Child Development Study that also provides information on cohort-members both in childhood and adulthood, including current employment status and past working history. The econometric method consists in a dynamic probit model with unobserved heterogeneity accounting for true state dependence and initial conditions problem. Consistently with the previous literature, we find that social maladjustment during childhood determines a lower employment probability in adulthood. This result holds also after controlling for true state dependence and past working history. Interestingly, the adult employment probability of socially maladjusted children is prone to greater variability according to life experiences than that of socially adjusted children. We find that being employed in the previous period, education, young-adulthood working experiences and, for females, early working experiences increases the adult employment probability for all cohort-members. However the positive effect is stronger for socially maladjusted children and, overall, investment in higher education seems to be relevant. This suggests that interventions during life development for socially maladjusted children could be important to reduce inequality in adult employment probability.social maladjustment, employment dynamics, child development, true state dependence, initial conditions

Conviction, Partial Adverse Selection and Labour Market Discrimination

This paper analyses data from the 6th sweep of National Child Development Study to investigate the labour market perspective of convicted individuals. Decomposition analysis makes it clear that convicted workers are actually discriminated against both in terms of employment and wage with respect to non-convicted. Adopting a simple theoretical model accounting for partial adverse selection problem in the hiring process, I show that discrimination is not only explained in terms of economic stigma but also may derive from the inefficiency of the police/justice system in detecting crime and punishing offenders. In fact, while firms may apply economic stigma to recover the expected extracosts from hiring convicted workers, firms rationality may impose to charge on convicted workers also unobservable expected extra-costs deriving from offenders non-convicted hired. The resulting over-stigma is increasing with the probability of offending and with the level of expected extra-costs, while it is decreasing with the probability of convicting offenders.

Making the Italian Labor Market More Flexible: An Evaluation of the Treu Reform

The Treu Law introduced temporary contracts and extended the applicability of fixed-term contracts in order to increase the flexibility of the labour market and to reduce unemployment. The paper inquires whether the reform has affected the duration dependence related to the out-flow from non-employment, how previous atypical contract experiences affect the probability of finding a stable job and if the probability of flowing toward a permanent contract is higher moving from a non-working state rather than from an atypical job. Applying a Mixed Proportional Hazard (MPH) model with competing risk to a sub-sample drawn from the WHIP dataset, I estimate the hazard rate for the state transitions. My main findings predict an increase in negative duration dependence for non-working state out-flow, meaning an amplification of the short-term unemployed - long-term unemployed duality. It is a consequence of the larger use of atypical contracts, that would provide a screening instrument for the hiring choices of firms. Previous atypical job experiences play a negative effect on the probability of moving toward a stable job if the origin state is a non-working condition, while they have a positive role in the transition toward an atypical job. Besides, there is no evidences that the probability of finding a permanent contract is higher for workers who move from an atypical contract rather from a non-working state. Finally, a human capital accumulation effect is found to explain the transition toward a stable job. Policy recommendations include promotion of longer contracts, implementation of training programs and services to facilitate job-search.

Farm level impact of rural development policy: a conditional difference in difference matching approach

We use a conditional difference-in-difference matching estimator and a 2003-2007 balanced panel drawn from the FADN Italian sample to evaluate the impact at the farm level of the implementation of the first Italian Rural Development Programme (RDP). We find that, in average, farms receiving at least a RDP payment increased family labor, while they did not increase total labour employed on farm. In addition, they experienced an increase in labor profitability and added value, even though the estimate significance varies accordingly to the matching method used. Our findings, suggest that the implementation of the first RDP produced a positive direct impact on rural GDP, while it did not prove to be effective in terms of rural employment growth.Common Agricultural Policy, Rural Development Policy, conditional diff-in-diff matching, Agricultural and Food Policy, Q12, Q18, C14,

The causal effect of family difficulties during childhood on adult labour market outcomes

Applying a propensity score matching approach to UK National Child Development Study, we find that experiencing family difficulties during childhood determines a negative and long-lasting impact on adult employment probabilities and wage. Standard econometric techniques and simulation based sensitivity analysis support our findings. The intensity of the disadvantage appears to increase with the number of recorded family difficulties. Moreover, we find that housing and economic problems are responsible for the more serious disadvantage, while disability of family members and disharmony act statistically significantly only if associated with other problems. Finally, the effect appears not to decline over the cohort working life.family difficulties, propensity score matching, labour market outcomes, simulation-based sensitivity analysis, long term causal effects

University-to-work transitions: the case of Perugia

The paper investigated on job transitions of graduates at the University of Perugia into the territory of the province of Perugia. In short, the paper has the following structure: after a review of the literature on university-to-work transition, original empirical results - adopting different statistical and econometric instruments - are presented and, finally, some policy implications are highlighted. University administrative information and data from the job centres of the province of Perugia are matched to reconstruct the timing of the university to job transitions of graduates at the University of Perugia since January 2004 to July 2009. Non-parametric Kaplan-Meier (KM) method and Cox proportional hazard model with competing risk are used, respectively, to estimate the survival functions and to determine the role of individual and studying characteristics in affecting the employment probabilities of graduates from a supply side point of view. Notwithstanding the paper is in a preliminary version, some key results are useful for deriving crucial considerations and policy implications.University-to-Work Transition, Perugia University and Province, Cox proportional hazard model.

Flexibility policies in the Italian labour market: some effects of the Treu reform

In last two decades, countries characterized by high levels of employment protection legislation (EPL) have introduced flexibility policies, in order to reduce elevated and persistent unemployment rates. European policy makers implemented reforms "at the margin", allowing for reduced protection only for some new contractual forms (called atypical contracts), characterized by lower firing costs. In Italy the first reform "at the margin" was implemented with the introduction of the Treu Law (L. 196/97), which introduced temporary contracts and made fixed-term contracts more widely allowed, in order to make the labour market more dynamic and to decrease the unemployment rate. To best of my knowledge, my thesis represents the first attempt to evaluate the effects of the Treu Reform on the Italian labour market. It is constituted by three chapters. The first of them consists in a survey in which I present a summary of framework approaches to analyse these policies and the more important implication of them for the labour market. Theoretical studies predict and the empirical studies show that the reforms affected various dimensions of the labour markets. In general, flexibility policies seem to fail their main aims. Effects were unclear with respect to unemployment rate, they were substantially negative on career development, and an increased duality arose in terms of wage and probability of leaving unemployment. The second and third chapters consist of two empirical frameworks that analyse some effects of the larger use of atypical contracts on various dimensions of the labour market. Both papers use micro-data for young individuals drawn from WHIP (Work Histories Italian Panel, Laboratorio R. Revelli) dataset. WHIP provides monthly information on job relationships and allow me to distinguish among three possible states: permanent contracts (PC), atypical contracts (AC), and non working state (NW)

Contratos de formación en el puesto de trabajo en Italia: ¿Formación o mecanismo de flexibilidad?

The 1997 ‘‘Treu Act’’ reformed the Italian labor market ‘‘at the margin’’. This paper studies the act’s effects on the flows out from on-the-job-training contracts (including both ‘‘Contratti di Formazione Lavoro’’ and Apprenticeship Contracts) into a new labor market status after one year. Applying a multinomial logit model and Fairlie decomposition, our findings suggest that the Treu Reform has shifted firms’ hiring preferences by changing the returns ofworkers’ characteristics. Moreover, with some differences between ‘‘Contratti di FormazioneLavoro’’ and Apprenticeship Contracts, the Treu Reform involved a substitution between transitions into a permanent job and into a new on-the-job-training contract. Interestingly, following the introduction of the Treu Reform, workers need to accumulate more experience in Appren-ticeship Contracts to achieve the same probability of future employment, which suggests that Italian firms value the flexibility characteristics of on-the-job-training contracts more than their training content. The underlying lesson we can draw is that in labor markets with a weak demand of skilled workers, policies aimed at promoting stable employment and avoiding precarious careers should consider the effectiveness of on-the-job training and monetary incentive levelsEn 1997, la ‘‘ley Treu’’ reformó el mercado laboral italiano ‘‘al margen’’. En este documento se estudian los efectos de la ley sobre los flujos de los contratos de formación en el puesto de trabajo (tanto contratti di formazione lavoro como contratos de prácticas) en un nuevo estado de mercado laboral tras un año. Aplicando un modelo lógit multinomial y la descomposición de Fairlie, nuestros hallazgos indican que la reforma de Treu ha cambiado las preferencias de contratación de las empresas modificando las características de las ganancias delos trabajadores. Además, incluyendo algunas diferencias entre contratti di formazione lavoro y contratos de prácticas, la reforma de Treu conllevó una sustitución de transiciones por un trabajo permanente y un nuevo contrato de formación en el puesto de trabajo. Curiosamente, según la introducción de la reforma de Treu, los trabajadores deben acumular más experiencia en contratos de prácticas para lograr las mismas probabilidades de empleo futuro, lo que indica que las empresas italianas valoran la flexibilidad de los contratos de formación en el puesto de trabajo más que el contenido de la formación. La lección subyacente que podemos concluir es que, en los mercados laborales con poca demanda de trabajadores cualificados, las políticas destinadas al fomento del trabajo estable y a la evitación de las carreras precarias deberían tener en cuenta la eficacia de la formación en el puesto de trabajo y los niveles de los incentivos económico

Do Caring Services Affect Off-Farm Work? Evidence from Italy

The article investigates the determinants of the off-farm work decision in Italian farm households, highlighting the role of caring services. Assuming that the household simultaneously decides over the optimal allocation of time of each of its members, a multivariate probit model is used to estimate the off-farm participation equations and to control for possible correlation among them. Evidence of correlation between spouse and descendant equations are found. Results suggest that policy actions geared at encouraging the off-farm participation of farm household members ought to enhance the availability and accessibility of caring services and increase the level of education of household members.Off-farm work participation, multivariate probit, household behavioural models, caring services, Agricultural and Food Policy, Consumer/Household Economics,