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.
|Number of pages||31|
|Journal||THE B.E. JOURNAL OF ECONOMIC ANALYSIS & POLICY|
|Publication status||Published - 2015|
- duration dependence
- duration models
- reforms “at the margin”
- signaling hypothesis