Matching Efficiency and Labour Market Reform in Italy: A Macroeconometric Assessment

Abstract

A matching theory approach is used to assess the impact on the Italian labour market of the 1997 Treu Act (legge Treu), which considerably eased the regulation of temporary work and favoured its growth in Italy. We re-parameterize the matching function as a Beveridge Curve and estimate it as a production frontier, finding huge differences in matching efficiency between the South and the rest of the country. The Treu Act appears to have improved matching efficiency in the North of the country, particularly for skilled workers, but also to have strengthened competition among skilled and unskilled workers, especially in the South. Copyright 2007 The Authors; Journal compilation 2007 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..

Regional matching (in)efficiency on the Croatian labour market

“…The application of this type of estimation to the labour market was first introduced by Warren (1991), while recently the model has been applied in a number of works estimating the efficiency of the matching process on specific (local) labour markets: Ibourk et al (2004) for France, Fahr -Sunde (2002, 2006 for Germany, Destefanis -Fonseca (2007) for Italy, Hynninen et al (2009) for Finland, and Jeruzalski -Tyrowicz (2009) for Poland. Ibourk et al (2004) explain how the efficiency of the matching process determines the number of matches that will be observed at given input values.…”

“…Additionally, Ibourk et al (2004) and Jeruzalski -Tyrowicz (2009) explain how efficiency can be considered as a product of two factors: (i) the rate at which job-seekers and employers meet (search intensity), and (ii) the probability that a contact leads to a successful match. Destefanis -Fonseca (2007) further elucidate that the efficiency term is influenced by the search intensity of firms and workers, by the effectiveness of search channels, and by the labour mismatch across micro markets defined over areas, industries, or skills. Munich -Svejnar (2009) state that the inefficiency may emerge by inadequate labour market institutions leading to decreasing search effort, skills depreciation, rising reservation wage of the unemployed, or geographical or skill mismatch.…”

“…Namely, some local markets may be more dynamic than others, while some may be populated by the more difficult groups of the unemployed. To account for this differentiation, following Destefanis -Fonseca (2007), Ibourk et al (2004), and Jeruzalski -Tyrowicz (2009), the variables presented in Table 1 are used. In addition, linear and quadratic trends are included to control for country-wide labour market fluctuations, while monthly and annual dummies are introduced in order to control for large seasonal fluctuations (model specification 5).…”

A comparison of the Beveridge curve dynamics in Italy and USA

“…19 Owing to the absence of official data on vacancies, there are not many empirical studies on the dynamics and the relations of the Beveridge curve in Italy (see e.g. Bragato 1990;De Stefanis and Fonseca 2007;Mocavini and Paliotta 2000). Figure 8 shows IT Beveridge curve, where inward shift of the curve from the late 1990s until today can be noted, indicating some improved efficiency for the Italian labour market in the last decade, but from the visual inspection of the graph the theoretical negative relationship between unemployment and vacancy is more evident in the 1990s rather than in the early 2000s.…”

(In)Efficiency of matching: the case of a post-transition economy

“…Most recently Destefanis and Fonseca (2007) apply the frontier estimation to the case of Italy to see if the so called Treu Act contributed to the higher matching efficiency. Interestingly, since for Italy no official vacancies data exist, they construct a measure basing on indicators taking into account effective job creation.…”