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

Author

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  • Cceilia Iona Lasino

    () (Istat and Luiss Lab)

  • Giovanna Vallanti

    () (Università 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.

Suggested Citation

  • Cceilia Iona Lasino & Giovanna Vallanti, 2011. "Reforms, labour market functioning and productivity dynamics: a sectoral analysis for Italy," Working Papers LuissLab 1193, Dipartimento di Economia e Finanza, LUISS Guido Carli.
  • Handle: RePEc:lui:lleewp:1193
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    References listed on IDEAS

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    Cited by:

    1. Patrizia Ordine & Giuseppe Rose, 2016. "Two-tier labor market reform and entry wage of protected workers: evidence from Italy," Empirical Economics, Springer, vol. 51(1), pages 339-362, August.
    2. Renzo Orsi & Francesco Turino, 2014. "The last fifteen years of stagnation in Italy: a business cycle accounting perspective," Empirical Economics, Springer, vol. 47(2), pages 469-494, September.
    3. Tealdi, Cristina, 2011. "Typical and atypical employment contracts: the case of Italy," MPRA Paper 39456, University Library of Munich, Germany.
    4. B. Biagi & MG. Ladu, 2015. "Productivity and employment dynamics: new evidence from Italian regions," Working Paper CRENoS 201505, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

    More about this item

    Keywords

    Productivity; Growth; Labour Market Institutions;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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