The importance of labor market transitions for economic policy

The analysis of labor market transitions is crucial for understanding the functioning of the labor market. Modelling of labor market flows has regained attention in recent years primarily to understand the impact of labor market regulations in European labor markets. We discuss the main statistical and econometrics methodologies used to analyse labor market transitions together with their strengths and weaknesses. By considering both methodologies and database characteristics, we summarize the main empirical findings of the analysis of labor market transitions in Europe and in Italy in particular. This study emphasizes how the investigation of labor market flows may be used for policy analysis to evaluate, for example, the effect of labor market reforms on unemployment duration, the unemployment gender gap, and regional differentials in labor market opportunities.