## Labor Market Reforms and Earnings Dynamics: the Italian Case

_IMF Working Papers, May 20, 2021_

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## Bibliographic details
- Authors: Davide Malacrino, Luigi Pistaferri
- Published: May 20, 2021
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781513573748.001

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### Overview
- Paper summarizes statistics on the key aspects of the distribution of earnings levels and earnings changes using administrative (social security) data from Italy between 1985 and 2016.
- Time covered: 1985–2016.
- Authors: Davide Malacrino, Luigi Pistaferri.
- Publication: IMF Working Papers, Working Paper No. 2021/142, Issue 142, Volume 2021, Pages: 49.
- DOI: https://doi.org/10.5089/9781513573748.001
- ISBN: 9781513573748
- ISSN: 1018-5941
- Stock No: WPIEA2021142

### Key findings
- Earnings inequality increased during 1985–2016.
- Earnings volatility increased during 1985–2016.
- Earnings mobility did not change significantly over the period.
- Labor market reforms of the 1990s and 2000s induced a substantial rise in fixed-term and part-time employment.
- The rise in part-time work explains much of the rise in earnings inequality.
- The rise in fixed-term contracts explains much of the rise in earnings volatility.

### Mechanisms through hours worked
- Both part-time work and fixed-term contracts affect the earnings distribution through hours worked:
  - Part-time jobs reduce hours worked within a week.
  - Fixed-term contracts reduce the number of weeks worked during the year and increase their volatility.

### Evidence on transition to permanent employment
- The authors find weak evidence that fixed-term contracts represent a "stepping-stone" to permanent employment.

### Productivity and human capital implications
- The paper offers suggestive evidence that the labor market reforms contributed to the slowdown in labor productivity in Italy.
- Proposed channel: reforms delayed human capital accumulation (in the form of general and firm-specific experience) of recent cohorts.

*Labor Market Reforms and Earnings Dynamics: the Italian Case, Davide Malacrino and Luigi Pistaferri, IMF Working Papers 2021, 142 (2021).*

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_Source: https://www.imf.org/en/publications/wp/issues/2021/05/20/labor-market-reforms-and-earnings-dynamics-the-italian-case-50247_