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Institutional rigidities and employment rigidity on the Italian labour larket

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  • Jiménez-Rodríguez, Rebeca
  • Russo, Giuseppe

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.

Suggested Citation

  • Jiménez-Rodríguez, Rebeca & Russo, Giuseppe, 2007. "Institutional rigidities and employment rigidity on the Italian labour larket," MPRA Paper 5758, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:5758
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    References listed on IDEAS

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    More about this item

    Keywords

    Labour market regulation; institutions; volatility; breaks;
    All these keywords.

    JEL classification:

    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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