Flexibility policies in the Italian labour market: some effects of the Treu reform

In last two decades, countries characterized by high levels of employment protection legislation (EPL) have introduced flexibility policies, in order to reduce elevated and persistent unemployment rates. European policy makers implemented reforms "at the margin", allowing for reduced protection only for some new contractual forms (called atypical contracts), characterized by lower firing costs. In Italy the first reform "at the margin" was implemented with the introduction of the Treu Law (L. 196/97), which introduced temporary contracts and made fixed-term contracts more widely allowed, in order to make the labour market more dynamic and to decrease the unemployment rate. To best of my knowledge, my thesis represents the first attempt to evaluate the effects of the Treu Reform on the Italian labour market. It is constituted by three chapters. The first of them consists in a survey in which I present a summary of framework approaches to analyse these policies and the more important implication of them for the labour market. Theoretical studies predict and the empirical studies show that the reforms affected various dimensions of the labour markets. In general, flexibility policies seem to fail their main aims. Effects were unclear with respect to unemployment rate, they were substantially negative on career development, and an increased duality arose in terms of wage and probability of leaving unemployment. The second and third chapters consist of two empirical frameworks that analyse some effects of the larger use of atypical contracts on various dimensions of the labour market. Both papers use micro-data for young individuals drawn from WHIP (Work Histories Italian Panel, Laboratorio R. Revelli) dataset. WHIP provides monthly information on job relationships and allow me to distinguish among three possible states: permanent contracts (PC), atypical contracts (AC), and non working state (NW).