Beyond eurosclerosis
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Transcript of Beyond eurosclerosis
BEYOND EUROSCLEROSISTITO BOERI & PIETRO GARIBALDI
Relazione di: Gerald Avondo, Luca Castelletti, Enrico Grigis, Matteo Foiadelli, Emilio Pirola, Paolo Viganò
Università degli studi di Bergamo - Corso di Politica economica, istituzioni, efficienza
18 Novembre 2010
1
Tito BoeriUniversità Bocconi, Milan, IGIER and Fondazione Rodolfo Debenedetti
Pietro GaribaldiUniversità
di Torino, Collegio Carlo Alberto, and Fondazione Rodolfo Debenedetti
2
MERCATO DEL LAVORO
3 problemi:
• eurosclerosi
Crescita senza occupazioneanni ’80 - 1994
aumento della mobilità risolve il problema
3
MERCATO DEL LAVORO
3 problemi:
• eurosclerosi
2 tipologie di lavoratori:• a tempo indeterminato, alta
protezione, benefici di disoccupazione (adulti)
• a tempo determinato, bassa protezione, assenza benefici
(giovani)
4
• mercato del lavoro duale
MERCATO DEL LAVORO
3 problemi:
• eurosclerosi
• mercato del lavoro duale
Percezione negativa del mercato del lavoro di
entrambe le categorie di lavoratori
5
• percezione dei lavoratori
MERCATO DEL LAVORO
possibile soluzione:
• flexicurity
trade-off fra la necessità di mobilità del mercato (flexibilty) e sicurezza
occupazionale (security)
6
SVILUPPO
• focus sulla disoccupazione ed evoluzione dal 1995 all’inizio della crisi odierna
• cause della riduzione della disoccupazione (mercato flessibile)
• riforme delle istituzioni che aumentano la flessibilità (regressione)
• riforme delle istituzioni che aumentano la flessibilità (analisi qualitativa)
• indagine sulle opinioni dei lavoratori
• flexicurity e conclusioni
• discussion
7
8
uno sguardo alla disoccupazione
DISOCCUPAZIONE
dal 1995/96 all’inizio della crisi attuale:
• 5 milioni di disoccupati in meno
• tasso di disoccupazione da 11% a 8%
• 21 milioni di nuovi posti di lavoro
• tasso di occupazione medio EU15 +6%
• totale delle ore di lavoro in Europa +13%
9
55% of EU unemployment was concentrated in these four countries at the end of
the period. This share could have been higher had Sweden and Finland, two ini-
tially low unemployment countries, not experienced a dramatic increase in unem-
ployment in the deep recession of the early 1990s. In the 1996–2006 period, the
countries that initially had the highest unemployment rates were the most successful
in reducing unemployment. By 2006 the share of unemployment in the Club-Med
had decreased to 45%. Overall, substantial progress was made not only in reducing
EU15 unemployment, but also its cross-country variation. These country dynamics
are also reported in Appendix A (Figure A1), where we plot the dynamics of the
unemployment rate in each European country.
The decline of mass unemployment in Europe was also associated with a reduc-
tion in the dispersion of unemployment rates within each country. In particular, the
cross-sectional standard deviation of unemployment rates across the regions of the
EU15 (defined according to the Nuts II classification) declined considerably after
1995, as a result of both less cross-country and less within-country variation in
Unemployment Rate
3
45
6
7
89
10
11
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
% o
f Lab
our
forc
e
EU15 US
0
1
2
3
4
5
6
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
% o
f Lab
our
forc
e
Long Term unemployment
EU15 US
(a)
(b)
Figure 1. Evolution of unemployment and long-term unemployment in theEU15 and in the US (as a fraction of the labour force)
Source: Eurostat, http://epp.eurostat.ec.europa.eu
414 TITO BOERI AND PIETRO GARIBALDI
55% of EU unemployment was concentrated in these four countries at the end of
the period. This share could have been higher had Sweden and Finland, two ini-
tially low unemployment countries, not experienced a dramatic increase in unem-
ployment in the deep recession of the early 1990s. In the 1996–2006 period, the
countries that initially had the highest unemployment rates were the most successful
in reducing unemployment. By 2006 the share of unemployment in the Club-Med
had decreased to 45%. Overall, substantial progress was made not only in reducing
EU15 unemployment, but also its cross-country variation. These country dynamics
are also reported in Appendix A (Figure A1), where we plot the dynamics of the
unemployment rate in each European country.
The decline of mass unemployment in Europe was also associated with a reduc-
tion in the dispersion of unemployment rates within each country. In particular, the
cross-sectional standard deviation of unemployment rates across the regions of the
EU15 (defined according to the Nuts II classification) declined considerably after
1995, as a result of both less cross-country and less within-country variation in
Unemployment Rate
3
45
6
7
89
10
11
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
% o
f Lab
our
forc
e
EU15 US
0
1
2
3
4
5
6
1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
% o
f Lab
our
forc
e
Long Term unemployment
EU15 US
(a)
(b)
Figure 1. Evolution of unemployment and long-term unemployment in theEU15 and in the US (as a fraction of the labour force)
Source: Eurostat, http://epp.eurostat.ec.europa.eu
414 TITO BOERI AND PIETRO GARIBALDI
10
unemployment rates. This is another new development in Europe. Up to the mid-
1990s, the dispersion, notably the within-country variation, in unemployment rates was
on the rise. In the following 13 years, the EU15 countries became more homogenous
societies, at least judging by regional labour market disparities (Boeri, 2008).
The documented disappearance of mass unemployment throughout the EU can-
not be accounted for as a side effect of falling participation in the labour market.
Netherlands
Ireland
UKBelgium
PortugalDenmarkLuxembourg
SpainItalyFrance
GermanyGreece
Sweden
Finland
–50
510
0 20
Del
ta U
nem
ploy
men
t rat
e 19
85–1
995
1985-1995
10
Austria
0 20
Unemployment rate 1985
10
(a)
Netherlands
Ireland
UKBelgium
Portugal
Denmark
Spain
France
Germany
Greece
Sweden
Finland
Austria
–15
–10
–50
5
5 10 15 20 25Unemployment rate 1996
Del
ta U
nem
ploy
men
t rat
e 19
96–2
006 Luxembourg
(b)
Italy
1996-2006
Figure 2. Individual countries evolutions: 1985–95 and 1996–2006
Source: European Labour Force Survey.
BEYOND EUROSCLEROSIS 415
unemployment rates. This is another new development in Europe. Up to the mid-
1990s, the dispersion, notably the within-country variation, in unemployment rates was
on the rise. In the following 13 years, the EU15 countries became more homogenous
societies, at least judging by regional labour market disparities (Boeri, 2008).
The documented disappearance of mass unemployment throughout the EU can-
not be accounted for as a side effect of falling participation in the labour market.
Netherlands
Ireland
UKBelgium
PortugalDenmarkLuxembourg
SpainItalyFrance
GermanyGreece
Sweden
Finland
–50
510
0 20
Del
ta U
nem
ploy
men
t rat
e 19
85–1
995
1985-1995
10
Austria
0 20
Unemployment rate 1985
10
(a)
Netherlands
Ireland
UKBelgium
Portugal
Denmark
Spain
France
Germany
Greece
Sweden
Finland
Austria–1
5–1
0–5
05
5 10 15 20 25Unemployment rate 1996
Del
ta U
nem
ploy
men
t rat
e 19
96–2
006 Luxembourg
(b)
Italy
1996-2006
Figure 2. Individual countries evolutions: 1985–95 and 1996–2006
Source: European Labour Force Survey.
BEYOND EUROSCLEROSIS 415
11
unemployment rates. This is another new development in Europe. Up to the mid-
1990s, the dispersion, notably the within-country variation, in unemployment rates was
on the rise. In the following 13 years, the EU15 countries became more homogenous
societies, at least judging by regional labour market disparities (Boeri, 2008).
The documented disappearance of mass unemployment throughout the EU can-
not be accounted for as a side effect of falling participation in the labour market.
Netherlands
Ireland
UKBelgium
PortugalDenmarkLuxembourg
SpainItalyFrance
GermanyGreece
Sweden
Finland
–50
510
0 20
Del
ta U
nem
ploy
men
t rat
e 19
85–1
995
1985-1995
10
Austria
0 20
Unemployment rate 1985
10
(a)
Netherlands
Ireland
UKBelgium
Portugal
Denmark
Spain
France
Germany
Greece
Sweden
Finland
Austria
–15
–10
–50
5
5 10 15 20 25Unemployment rate 1996
Del
ta U
nem
ploy
men
t rat
e 19
96–2
006 Luxembourg
(b)
Italy
1996-2006
Figure 2. Individual countries evolutions: 1985–95 and 1996–2006
Source: European Labour Force Survey.
BEYOND EUROSCLEROSIS 415
12
Going beyond the headcount definition of employment, one can measure employ-
ment dynamics also in terms of working hours. Not surprisingly, total working hours
increased in Europe by 13% since 1995, a percentage increase very similar to that
experienced by working hours in the United States over the same period (Figure 4a).
As shown in Figure 4b, a quantitatively important feature of the increase in Euro-
pean working hours was the growth of part-time employment: its incidence in total
employment grew from 15% to 18% in Europe while it declined slightly in the Uni-
ted States. As a result, about one-third of the total growth in working hours in the
EU15 was accounted for by the increase in part-time employment (Table 2). The
Total working hours
230
240
250
260
270
280
290Total EU15 Total US Full Time EU15
Incidence of part time employment
10
11
12
13
14
15
16
17
18
19
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
United States EU15
(b)
(a)
Figure 4. Total working hours and incidence of part-time employment
Source: Eurostat, http://epp.eurostat.ec.europa.eu; OECD, http://stats.oecd.org/wbos/index.aspx
418 TITO BOERI AND PIETRO GARIBALDI
13
Going beyond the headcount definition of employment, one can measure employ-
ment dynamics also in terms of working hours. Not surprisingly, total working hours
increased in Europe by 13% since 1995, a percentage increase very similar to that
experienced by working hours in the United States over the same period (Figure 4a).
As shown in Figure 4b, a quantitatively important feature of the increase in Euro-
pean working hours was the growth of part-time employment: its incidence in total
employment grew from 15% to 18% in Europe while it declined slightly in the Uni-
ted States. As a result, about one-third of the total growth in working hours in the
EU15 was accounted for by the increase in part-time employment (Table 2). The
Total working hours
230
240
250
260
270
280
290Total EU15 Total US Full Time EU15
Incidence of part time employment
10
11
12
13
14
15
16
17
18
19
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
United States EU15
(b)
(a)
Figure 4. Total working hours and incidence of part-time employment
Source: Eurostat, http://epp.eurostat.ec.europa.eu; OECD, http://stats.oecd.org/wbos/index.aspx
418 TITO BOERI AND PIETRO GARIBALDI
Going beyond the headcount definition of employment, one can measure employ-
ment dynamics also in terms of working hours. Not surprisingly, total working hours
increased in Europe by 13% since 1995, a percentage increase very similar to that
experienced by working hours in the United States over the same period (Figure 4a).
As shown in Figure 4b, a quantitatively important feature of the increase in Euro-
pean working hours was the growth of part-time employment: its incidence in total
employment grew from 15% to 18% in Europe while it declined slightly in the Uni-
ted States. As a result, about one-third of the total growth in working hours in the
EU15 was accounted for by the increase in part-time employment (Table 2). The
Total working hours
230
240
250
260
270
280
290Total EU15 Total US Full Time EU15
Incidence of part time employment
10
11
12
13
14
15
16
17
18
19
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
United States EU15
(b)
(a)
Figure 4. Total working hours and incidence of part-time employment
Source: Eurostat, http://epp.eurostat.ec.europa.eu; OECD, http://stats.oecd.org/wbos/index.aspx
418 TITO BOERI AND PIETRO GARIBALDI
MIGLIORAMENTI QUALITATIVI
• aumento delle ore di lavoro e non solo del numero di persone
• riduzione lavoratori scoraggiati
• società più omogenea:
• fra diversi paesi
• all’interno dei paesi stessi
• incremento nell’utilizzo di forme di lavoro come il part-time
14
POSSIBILI SPIEGAZIONI
• invecchiamento della popolazione
• disoccupazione fra i giovani è più elevata
• invecchiamento della popolazione potrebbe abbassare disoccupazione
• analisi dividendo per classi di età
• la riduzione è trasversale a tutte le classi
• l’invecchiamento non spiega la riduzione
15
POSSIBILI SPIEGAZIONI
• flussi migratori
• Europa è stata interessata da rilevanti flussi migratori
• flussi migratori potrebbero alterare disoccupazione
• analisi dividendo per classi di provenienza geografica
• migrazioni non spiegano la riduzione
16
• invecchiamento della popolazione
POSSIBILI SPIEGAZIONI
• dinamica salariale 1995 - 2006 crescita salariale media intorno al 2,5% annuo in termini nominali (Unione
europea, 2008)
17
POSSIBILI SPIEGAZIONI
• costo del lavoro
•2000 - 2005 crescita media intorno al 3%
•dal 2005 crescita media intorno al 2,5%
18
• dinamica salariale
POSSIBILI SPIEGAZIONI
• produttività
1995 - 2006 la produttività cresce in quanto il clup (costo
del lavoro per unità di prodotto) in termini reali
diminuisce annualmente dello 0,5%
19
• dinamica salariale
• costo del lavoro
20
ma quale è la vera causa?
TURNOVER
•bassa mobilità•mercato del lavoro ingessato•lunghi periodi di disoccupazione
21
disoccupazione può calare per due motivi:
• diminuzione dei flussi in entrata nel bacino di disoccupati
TURNOVER
• aumento dei flussi in uscita dal bacino di disoccupati
•alta mobilità•mercato del lavoro oliato•brevi periodi di disoccupazione
22
disoccupazione può calare per due motivi:
• diminuzione dei flussi in entrata nel bacino di disoccupati
23
interval, we calibrate the average months in the last interval so as to match long-
term unemployment over a 10-year horizon.1
With the above caveats in mind, Figure 5 reports annual inflows and outflows
rates, as estimated from the OECD duration database, for the EU15 as a pro-
portion of the relative population at risk. In other words, the inflows rate st is
reported as a fraction of total employment while the outflow rate ft is reported
as a fraction of the total unemployed population. After having peaked during
the 1992–3 recession, unemployment inflows would seem to have stabilized at a
level significantly larger than the rates registered in the second half of the
1980s. Unemployment outflows also display an upward trend with the peak
being reached in 2001.
A quantitative characterization of the role played by unemployment inflows and
outflows in the decline of European unemployment can be obtained by following
the decomposition suggested by Petrongolo and Pissarides (2008). To do so, we
start by defining average unemployment in two decades, namely the 1985–95 and
the more recent 1996–2006 periods, that is, the same time intervals that were
1 The average duration is technically defined as Dt = Ri=15diwit where d1 = 0.5, d2 = 2, d3 = 4.5 and d4 = 9 while the weights
wit are provided by the database. The missing central interval d5 is obtained so that unemployment over a 10-year horizon
reasonably matches the steady state (ergodic) unemployment estimated in Table 7.
0.03000
0.03500
0.04000
0.04500
0.05000
0.05500
0.06000
0.06500
0.07000
0.07500
198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620070.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
InflowsOutflows
Inflows, left scale
scaleOutflows, right
Figure 5. Proxy unemployment inflows (as a percentage of employment) andoutflows (as a percentage of unemployment)
Source: Estimates based on the OECD Unemployment Duration Database. See the text for details on themethodology to estimate unemployment inflows and outflows.
BEYOND EUROSCLEROSIS 421
interval, we calibrate the average months in the last interval so as to match long-
term unemployment over a 10-year horizon.1
With the above caveats in mind, Figure 5 reports annual inflows and outflows
rates, as estimated from the OECD duration database, for the EU15 as a pro-
portion of the relative population at risk. In other words, the inflows rate st is
reported as a fraction of total employment while the outflow rate ft is reported
as a fraction of the total unemployed population. After having peaked during
the 1992–3 recession, unemployment inflows would seem to have stabilized at a
level significantly larger than the rates registered in the second half of the
1980s. Unemployment outflows also display an upward trend with the peak
being reached in 2001.
A quantitative characterization of the role played by unemployment inflows and
outflows in the decline of European unemployment can be obtained by following
the decomposition suggested by Petrongolo and Pissarides (2008). To do so, we
start by defining average unemployment in two decades, namely the 1985–95 and
the more recent 1996–2006 periods, that is, the same time intervals that were
1 The average duration is technically defined as Dt = Ri=15diwit where d1 = 0.5, d2 = 2, d3 = 4.5 and d4 = 9 while the weights
wit are provided by the database. The missing central interval d5 is obtained so that unemployment over a 10-year horizon
reasonably matches the steady state (ergodic) unemployment estimated in Table 7.
0.03000
0.03500
0.04000
0.04500
0.05000
0.05500
0.06000
0.06500
0.07000
0.07500
198519861987198819891990199119921993199419951996199719981999200020012002200320042005200620070.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
0.5
0.55
0.6
InflowsOutflows
Inflows, left scale
scaleOutflows, right
Figure 5. Proxy unemployment inflows (as a percentage of employment) andoutflows (as a percentage of unemployment)
Source: Estimates based on the OECD Unemployment Duration Database. See the text for details on themethodology to estimate unemployment inflows and outflows.
BEYOND EUROSCLEROSIS 421
OUTFLOWS
• 85% del calo della disoccupazione dipende dall’aumento dei flussi in uscita
• l’indice di mobilità di shorrocks evidenzia un aumento della mobilità fra paesi
• aumento del job to job
• honeymoon effect
24
25
probability of leaving any state is zero, hence the trace is equal to the number
of states. The index is bound above from one when ‘stayer’ coefficients are not
larger than 1/S, a condition which is always satisfied in our estimated transition
matrices.
Figure 6 plots a weighted average (weights are provided by the national working
age populations) for the 11 countries of the EU15 listed above of our unemploy-
ment turnover estimates (within period unemployment inflows plus outflows over
the beginning of period unemployment stock) and scalar measures of mobility in
the 1995–2004 period, together with the evolution of the unemployment rate
for the same group of countries. The message is once more rather clear: unemploy-
ment declined in Europe at times in which the turnover of the unemployment pool
and the mobility across labour market states were increasing.
In order to complete our characterization of mobility patterns, we also pro-
vide in Table 4 alternative scalar measures of mobility in the periods 1985–95
and 1996–2004 for all countries in which this information is available. In partic-
ular, we display Shorrocks mobility indexes obtained by 3 · 3 matrices in the
two subperiods, even though in the first period the time coverage is more lim-
ited. Figure A3 in Annex A provides the time-series evolution of this measure in
the individual countries. As discussed above, due to the retrospective nature of our
data, some flows across participation margins may capture the subjective classifica-
tion of the labour market status in the initial period (for instance, some persons
declaring to have been unemployed one year earlier were actually already consid-
0.29
0.3
0.31
0.32
0.33
0.34
0.35
0.36
0.37
0.38
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
1.25
4
5
6
7
8
9
10
11
12
Average U rate (%)A
vera
geU
turn
over
(%)
Average
Mobility
Index(%
)
av_U_turnover av_U_rate av_Mobility Index av_U_rate
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 6. Evolution of unemployment turnover and scalar measures of mobil-ity in a group of nine EU Member States
Notes: Weighted averages of the following EU countries have been considered for which micro-data fromELFS is available: Belgium, Denmark, Spain, Finland, France, Greece, Italy, Luxembourg and Portugal.Weights are pounded by the relative population shares.
Source: European Labour Force Survey.
424 TITO BOERI AND PIETRO GARIBALDI
probability of leaving any state is zero, hence the trace is equal to the number
of states. The index is bound above from one when ‘stayer’ coefficients are not
larger than 1/S, a condition which is always satisfied in our estimated transition
matrices.
Figure 6 plots a weighted average (weights are provided by the national working
age populations) for the 11 countries of the EU15 listed above of our unemploy-
ment turnover estimates (within period unemployment inflows plus outflows over
the beginning of period unemployment stock) and scalar measures of mobility in
the 1995–2004 period, together with the evolution of the unemployment rate
for the same group of countries. The message is once more rather clear: unemploy-
ment declined in Europe at times in which the turnover of the unemployment pool
and the mobility across labour market states were increasing.
In order to complete our characterization of mobility patterns, we also pro-
vide in Table 4 alternative scalar measures of mobility in the periods 1985–95
and 1996–2004 for all countries in which this information is available. In partic-
ular, we display Shorrocks mobility indexes obtained by 3 · 3 matrices in the
two subperiods, even though in the first period the time coverage is more lim-
ited. Figure A3 in Annex A provides the time-series evolution of this measure in
the individual countries. As discussed above, due to the retrospective nature of our
data, some flows across participation margins may capture the subjective classifica-
tion of the labour market status in the initial period (for instance, some persons
declaring to have been unemployed one year earlier were actually already consid-
0.29
0.3
0.31
0.32
0.33
0.34
0.35
0.36
0.37
0.38
0.85
0.9
0.95
1
1.05
1.1
1.15
1.2
1.25
4
5
6
7
8
9
10
11
12
Average U rate (%)A
vera
geU
turn
over
(%)
Average
Mobility
Index(%
)
av_U_turnover av_U_rate av_Mobility Index av_U_rate
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Figure 6. Evolution of unemployment turnover and scalar measures of mobil-ity in a group of nine EU Member States
Notes: Weighted averages of the following EU countries have been considered for which micro-data fromELFS is available: Belgium, Denmark, Spain, Finland, France, Greece, Italy, Luxembourg and Portugal.Weights are pounded by the relative population shares.
Source: European Labour Force Survey.
424 TITO BOERI AND PIETRO GARIBALDI
26
preted as hirings occurring without intervening unemployment or inactivity spells.
Clearly, the same caveats concerning unemployment turnover apply also to this
measure, which is likewise biased downwards because it neglects hirings resulting in
separations within the same month.
Figure 7 displays the weighted average of job-to-job shifts as a fraction of depen-
dent employment across all EU countries for which data are available. Once more,
we observe a rising trend mirroring the decline in unemployment. Lower un-
employment and higher mobility in Europe would seem to be two sides of the same
coin.
Overall, the European labour market landscape looks much different from the
sclerotic situation of the early 1990s: there is significantly more mobility and
notably more turnover in the unemployment pool. We also documented that the
increase in mobility occurred at times in which unemployment was declining. In
order to better characterize the implications of this higher mobility on unem-
ployment, we report in Table 5 the long-run unemployment levels that can be
predicted on the basis of our transition matrices and compare them with the
levels of unemployment prevailing before the global recession in the EU15 coun-
tries for which this information is available. Any transition matrix, when inter-
preted as a stochastic, first-order, Markov process governing the evolution of
unemployment, is indeed consistent with a level of unemployment (ergodic) that
is constant in the long run. Table 5 shows that in the 1996–2004 period 9
countries out of 11 had ergodic levels of unemployment lower than the actual
6%7%8%
9%10%11%12%
13%14%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Job to job flows as % of total dependent employment U rates
Figure 7. Job-to-job shifts as a fraction of dependent employment in 9 EUcountries
Notes: Job-to-job shifts are obtained as difference between total hirings and inflows into employment. Datarefer to the following EU Member States for which micro-data is available: Belgium, Denmark, Spain, Fin-land, France, Greece, Italy, Luxembourg and Portugal. Weights are pounded by the relative populationshares.
Source: European Labour Force Survey.
426 TITO BOERI AND PIETRO GARIBALDI
preted as hirings occurring without intervening unemployment or inactivity spells.
Clearly, the same caveats concerning unemployment turnover apply also to this
measure, which is likewise biased downwards because it neglects hirings resulting in
separations within the same month.
Figure 7 displays the weighted average of job-to-job shifts as a fraction of depen-
dent employment across all EU countries for which data are available. Once more,
we observe a rising trend mirroring the decline in unemployment. Lower un-
employment and higher mobility in Europe would seem to be two sides of the same
coin.
Overall, the European labour market landscape looks much different from the
sclerotic situation of the early 1990s: there is significantly more mobility and
notably more turnover in the unemployment pool. We also documented that the
increase in mobility occurred at times in which unemployment was declining. In
order to better characterize the implications of this higher mobility on unem-
ployment, we report in Table 5 the long-run unemployment levels that can be
predicted on the basis of our transition matrices and compare them with the
levels of unemployment prevailing before the global recession in the EU15 coun-
tries for which this information is available. Any transition matrix, when inter-
preted as a stochastic, first-order, Markov process governing the evolution of
unemployment, is indeed consistent with a level of unemployment (ergodic) that
is constant in the long run. Table 5 shows that in the 1996–2004 period 9
countries out of 11 had ergodic levels of unemployment lower than the actual
6%7%8%
9%10%11%12%
13%14%
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
Job to job flows as % of total dependent employment U rates
Figure 7. Job-to-job shifts as a fraction of dependent employment in 9 EUcountries
Notes: Job-to-job shifts are obtained as difference between total hirings and inflows into employment. Datarefer to the following EU Member States for which micro-data is available: Belgium, Denmark, Spain, Fin-land, France, Greece, Italy, Luxembourg and Portugal. Weights are pounded by the relative populationshares.
Source: European Labour Force Survey.
426 TITO BOERI AND PIETRO GARIBALDI
27
compiled by the OECD (averaging the gross replacement rates for two earning levels,
three family situations and three durations of unemployment), DGDPit is GDP growth,
TAXit is a measure of the tax wedge, PREGit is a measure of product market regulation
and INDit measures the share of workers in the manufacturing sector (as the secular
increase in the share of employment in the small business service sector is bound to
affect labour market flows) We also include country fixed effects (ai) and year dummies
(ct). The time period covered by these regression ranges from 1995 to 2004. In the
case of UBit, series are available only at two-year frequencies and have been inter-
polated in order not to reduce significantly the degrees of freedom.
The results of these regressions are reported in Tables 6 through 8. All regres-
sions include country and year dummies. Thus, they capture country-specific time-
series variation in the institutions. All regressions point to significant correlations
between mobility and institutions, generally in line with predictions from economic
theory. In particular, in the case of unemployment turnover (Table 6), the decline
in the generosity of unemployment benefits and the strictness of employment pro-
tection legislation are associated with an increase in the turnover of the unemploy-
ment pool in the EU. The coefficient on EPLit is negative and significant across
different specifications. Importantly, it holds for both components of EPL, fixed-
term and permanent contracts.
The same type of correlations are observed in the case of the mobility index
(Table 7). Finally, job-to-job shifts (Table 8) are negatively correlated with the
generosity of unemployment benefits while the negative effect of EPL is driven by
permanent contracts as it is not significant for temporary contracts.
Employment
Ah/lAl/l
A B C D
w
Wage
Figure 9. The honeymoon effect
BEYOND EUROSCLEROSIS 431
28
HONEYMOON EFFECT
• mercato completamente flessibile (impresa 1):
• situazione di crisi: l’impresa mantiene un livello di occupazione strettamente necessario (punto A)
• situazione di boom: l’impresa espande il livello occupazionale (punto B)
• livello medio occupazionale: punto C
HONEYMOON EFFECT
• mercato duale (impresa 2):
• situazione di crisi: l’impresa mantiene solo i lavoratori a tempo indeterminato (punto C che coincide con il livello medio dell’impresa 1)
• situazione di boom: l’impresa assume inoltre i lavoratori necessari a tempo determinato (punto B)
• livello medio occupazionale (punto D)
29
30
quali cambiamenti delle istituzioni spiegano la mobilità?
ISTITUZIONI
• istituzioni che incidono significativamente sulla mobilità e sui flussi di disoccupazione:
• riduzione della protezione dei lavoratori
• riduzione dei benefici di disoccupazione
31
32
period for all countries for which these two measures are available over the
entire period. According to economic theory, these two institutions are the natu-
ral candidate for analysing the dynamics of European mobility. In particular,
reductions in employment protection are bound to increase both unemployment
inflows and outflows (Bentolila and Bertola, 1990). The relaxation of constraints
on the use of temporary contracts is also bound to increase mobility and job-to-
job flows. Most importantly, as was argued by Boeri and Garibaldi (2007) and
we highlight in Box 1, the relaxation of temporary contracts from a rigid labour
market is associated not only with an increase in mobility, but also with an
increase in labour demand. In other words, there is a positive relationship
between the liberalization of temporary contracts, the increase in mobility and
the increase in total employment, hence the reduction in unemployment
(Box 1).
2323
.524
24.5
2525
.5
Ave
rage
UB
Inde
x
1985 1990 1995 2000 2005
year
2.2
2.4
2.6
2.8
Ave
rage
EP
L O
vera
ll In
dex
_ _ _ Average EPL Overall Index (right-hand axis)
___ Average UB index
Figure 8. Evolution of the average UB and EPL indexes
Notes: (1) The average UB index is defined as the weighted average of the gross unemployment benefitreplacement rates for the only countries for which data are available: Austria, Finland, Germany, Swedenand United Kingdom. For further details, see OECD, ‘Benefits and wages: gross replacement rates’. (2) Theaverage Overall EPL strictness index is defined as the weighted average of the summary measures for regularand temporary contract workers of EU15. (3) Weights are based on total national population.
Source: OECD, http://www.oecd.org
428 TITO BOERI AND PIETRO GARIBALDI
period for all countries for which these two measures are available over the
entire period. According to economic theory, these two institutions are the natu-
ral candidate for analysing the dynamics of European mobility. In particular,
reductions in employment protection are bound to increase both unemployment
inflows and outflows (Bentolila and Bertola, 1990). The relaxation of constraints
on the use of temporary contracts is also bound to increase mobility and job-to-
job flows. Most importantly, as was argued by Boeri and Garibaldi (2007) and
we highlight in Box 1, the relaxation of temporary contracts from a rigid labour
market is associated not only with an increase in mobility, but also with an
increase in labour demand. In other words, there is a positive relationship
between the liberalization of temporary contracts, the increase in mobility and
the increase in total employment, hence the reduction in unemployment
(Box 1).
2323
.524
24.5
2525
.5
Ave
rage
UB
Inde
x
1985 1990 1995 2000 2005
year
2.2
2.4
2.6
2.8
Ave
rage
EP
L O
vera
ll In
dex
_ _ _ Average EPL Overall Index (right-hand axis)
___ Average UB index
Figure 8. Evolution of the average UB and EPL indexes
Notes: (1) The average UB index is defined as the weighted average of the gross unemployment benefitreplacement rates for the only countries for which data are available: Austria, Finland, Germany, Swedenand United Kingdom. For further details, see OECD, ‘Benefits and wages: gross replacement rates’. (2) Theaverage Overall EPL strictness index is defined as the weighted average of the summary measures for regularand temporary contract workers of EU15. (3) Weights are based on total national population.
Source: OECD, http://www.oecd.org
428 TITO BOERI AND PIETRO GARIBALDI
MODELLO ECONOMETRICO
• Y diverse misure di mobilità
• EPL misura di protezione dell’occupazione compilata dall’OECD
• UB misura dei benefici per i disoccupati compilato dall’OECD
• TAX misura del cuneo fiscale
• PREG misura di protezione del mercato del prodotto
• IND misura della quota di lavoratori nel settore manufatturiero
Now consider a two tier regime with a stock of permanent contracts. In partic-
ular, starting from the rigid setting (when the firm hires in point C), let the firm
enjoy ‘marginal flexibility’. We assume that unexpectedly the firm can hire and
fire workers on a temporary basis, but, at the same time, it cannot break the
existing stock of permanent contracts. In reality, such contracts do expire through
natural turnover, but for simplicity we assume that this possibility is not available
to the firm. Formally, the constraint on the stock of permanent workers corre-
sponds to an employment position at point C in the figure. A firm that has sud-
denly the option to hire temporary workers should exploit this possibility. In
good times the firm should hire temporary workers up to the optimal employ-
ment level in the frictionless regime, and dismiss such workers in bad times. In
other words, the firm in the two-tier regime will have average employment in
point D in the figure. This implies that a two tier regime leads to an increase in
mobility and in average employment, while average productivity falls. The latter effect
is linked to the law of diminishing returns.
Reductions in the generosity of non-employment benefits should increase flows across
employment and non-employment and will be considered as one of the determinants
of mobility. The tax wedge is another institution that has been often cited in the
literature as one of the determinants of unemployment and mobility. It generally
operates in conjunction with unemployment benefits in affecting labour supply
(Pissarides, 1998) and hence we should control for it. Product market regulations are
also bound to affect the elasticity of labour demand altering the effects on employ-
ment and unemployment of labour market institutions (Bertola and Boeri, 2002). In
order to control for these effects coming from the product market side, we include in
the set of regressors an index of product market regulation tabulated by the OECD,
which is decreasing in the degree of competition of product markets.
We test the effects of reforms on mobility using a multivariate setting. We ask to
what extent changes in employment protection legislation, unemployment benefits
and other institutional indicators are associated with changes in unemployment turn-
over, the mobility index, and estimated job-to-job shifts by combining cross-sectional
and time-series observations. Specifically, we run the following panel regressions:
Yit ! ai " ct " b1EPLit " b2UBit " b3DGDPit " b4TAXit " b5PREGit
" b6INDit " eit #1$where Yit is alternatively our measure for unemployment turnover, the Shorrocks
index of mobility and job-to-job shifts as a fraction of dependent employment for
country i at time t, EPLit is the measure of strictness of employment protection
legislation compiled by OECD (overall and separately for regular and temporary
workers), UBit is the summary measure of generosity of unemployment benefits also
430 TITO BOERI AND PIETRO GARIBALDI
Now consider a two tier regime with a stock of permanent contracts. In partic-
ular, starting from the rigid setting (when the firm hires in point C), let the firm
enjoy ‘marginal flexibility’. We assume that unexpectedly the firm can hire and
fire workers on a temporary basis, but, at the same time, it cannot break the
existing stock of permanent contracts. In reality, such contracts do expire through
natural turnover, but for simplicity we assume that this possibility is not available
to the firm. Formally, the constraint on the stock of permanent workers corre-
sponds to an employment position at point C in the figure. A firm that has sud-
denly the option to hire temporary workers should exploit this possibility. In
good times the firm should hire temporary workers up to the optimal employ-
ment level in the frictionless regime, and dismiss such workers in bad times. In
other words, the firm in the two-tier regime will have average employment in
point D in the figure. This implies that a two tier regime leads to an increase in
mobility and in average employment, while average productivity falls. The latter effect
is linked to the law of diminishing returns.
Reductions in the generosity of non-employment benefits should increase flows across
employment and non-employment and will be considered as one of the determinants
of mobility. The tax wedge is another institution that has been often cited in the
literature as one of the determinants of unemployment and mobility. It generally
operates in conjunction with unemployment benefits in affecting labour supply
(Pissarides, 1998) and hence we should control for it. Product market regulations are
also bound to affect the elasticity of labour demand altering the effects on employ-
ment and unemployment of labour market institutions (Bertola and Boeri, 2002). In
order to control for these effects coming from the product market side, we include in
the set of regressors an index of product market regulation tabulated by the OECD,
which is decreasing in the degree of competition of product markets.
We test the effects of reforms on mobility using a multivariate setting. We ask to
what extent changes in employment protection legislation, unemployment benefits
and other institutional indicators are associated with changes in unemployment turn-
over, the mobility index, and estimated job-to-job shifts by combining cross-sectional
and time-series observations. Specifically, we run the following panel regressions:
Yit ! ai " ct " b1EPLit " b2UBit " b3DGDPit " b4TAXit " b5PREGit
" b6INDit " eit #1$where Yit is alternatively our measure for unemployment turnover, the Shorrocks
index of mobility and job-to-job shifts as a fraction of dependent employment for
country i at time t, EPLit is the measure of strictness of employment protection
legislation compiled by OECD (overall and separately for regular and temporary
workers), UBit is the summary measure of generosity of unemployment benefits also
430 TITO BOERI AND PIETRO GARIBALDI
33
TURNOVER
• EPL significativo per contratti a tempo determinato e indeterminato
• correlazione negativa
• UB significativo
• correlazione negativa
34
Some of the effects are also quantitatively sizeable. For instance, a reduction of
EPL of one point (e.g., moving a country like Spain to the level of Finland) by itself
implies an increase of the overall mobility index of 4 percentage points (Table 7),
albeit lower than what was observed in Table 4. The effects of changes in un-
employment benefits are smaller. For instance, a reduction of the generosity of
one point (e.g., moving Denmark slightly above Belgium) implies an increase in
unemployment turnover of 1.7% (Table 6).
Our estimates of Equation (1) assume that institutional variables are completely
independent of the mobility rate. One could argue that institutional changes took
place exactly in those countries that had low mobility in the mid-1990s. In other
words, one should take into account that institutions may be themselves endoge-
nous variables. This is a serious econometric issue. In order to properly address this
endogeneity problem, we would need a set of instruments for the institutional vari-
ables in the right-hand side of Equation (1). Unfortunately these instruments are
not readily available in the literature, and most of the cross-country regressions on
unemployment make the same exogeneity assumption implied by Equation (1). Our
assumption is indeed coherent with the mainstream literature in this respect.
Table 6. Fixed-effects panel regressions of unemployment turnover oninstitutions
Unemployment turnover
(1) (2) (3) (4) (5)
UnemploymentBenefit – OECD Index
)0.017***()3.102)
)0.018***()3.309)
)0.019***()3.586)
)0.014***()2.776)
)0.016***()3.065)
Employment ProtectionLegislation – OECD Index
)0.223***()3.149)
Employment ProtectionLegislation (Regular Empl.)– OECD Index
)0.260***()3.168)
)0.264***()3.242)
)0.070()0.770)
)0.069()0.765)
Employment ProtectionLegislation (TemporaryEmpl.) – OECD Index
)0.102***()2.839)
)0.092**()2.557)
)0.091***()2.673)
)0.120***()3.155)
GDP growth rate )0.024**()2.192)
)0.021*()1.911)
)0.023**()2.092)
)0.031***()2.899)
)0.034***()3.139)
Tax Wedge )1.675*()1.681)
1.149(0.983)
0.654(0.545)
Share Manufacturing Sectorover total employment
0.129***(4.063)
0.129***(4.067)
Product Market Regulation 0.091*(1.745)
Constant 2.344***(7.096)
2.712***(7.416)
3.398***(6.222)
)1.149()0.933)
)1.270()1.035)
Number of observations 160 160 160 160 158Adj. R squared 0.32 0.35 0.36 0.43 0.45
Notes: Including year dummies from 1985 to 2004. t-statistics in parentheses.
Source: European Labour Force Survey.
432 TITO BOERI AND PIETRO GARIBALDI
35
INDICE DI MOBILITÀ DI SHORROCKS
• EPL significativo per contratti a tempo determinato e indeterminato
• correlazione negativa
• UB significativo
• correlazione negativa
36
While the overall effects of institutions on mobility appear fairly robust across
specifications, the results are less clear when we use our model to assess whether
institutions reduce specifically the transitions to and from unemployment. In partic-
ular, we tested whether the model of Equation (1) has similar implications when we
use as dependent variable the transition rates from employment to unemployment
and from unemployment to employment. The results are reported in Table 9 and
show that unemployment benefits and employment protection are often no longer
significant. However, EPL for regular contracts is negatively correlated with flows
from unemployment to employment.
Overall, our multivariate analysis suggests that labour market mobility, un-
employment turnover and partly job-to-job shifts in the EU15 were fostered by insti-
tutional reforms reducing the strictness of employment protection or the generosity
of unemployment benefits.
The next section analyses in more detail the nature of these reforms and dis-
cusses how they could have possibly affected labour market mobility. This analysis
will turn out to be useful in discussing future directions of reform as well as percep-
tions of Europeans regarding the evolution of their labour markets.
Table 7. Fixed-effects panel regressions of mobility indexes on institutions
Mobility index (3 · 3 matrix)
(1) (2) (3) (4)
Unemployment Benefit – OECDIndex
)0.004***()3.838)
)0.004***()3.840)
)0.003***()3.132)
)0.003***()3.002)
Employment Protection Legislation– OECD Index
)0.044***()3.225)
Employment Protection Legislation(Regular Empl.) – OECD Index
)0.025()1.570)
)0.026*()1.658)
)0.017()0.970)
Employment Protection Legislation(Temporary Empl.) – OECD Index
)0.022***()3.174)
)0.013*()1.712)
)0.013*()1.696)
GDP growth rate )0.000()0.099)
)0.000()0.032)
0.001(0.564)
0.001(0.426)
Tax Wedge )0.006***()3.229)
)0.006***()3.179)
)0.004**()2.108)
)0.003()1.291)
Product Market Regulation )0.031***()2.875)
)0.031***()2.897)
Share of Manufacturing Sector overtotal employment
0.006(0.007)
Constant 0.803***8.558)
0.810***(7.924)
0.832***(8.250)
0.641***(2.820)
Number of observations 167 167 165 165Adj. R-squared 0.45 0.46 0.49 0.49
Notes: Including year dummies from 1985 to 2004. t-statistics in parentheses.
Source: European Labour Force Survey.
BEYOND EUROSCLEROSIS 433
37
SPOSTAMENTO JOB TO JOB
• EPL significativo solo per contratti a tempo indeterminato
• correlazione negativa
• UB significativo
• correlazione negativa
38
4. WHICH REFORMS?
The regressions in the previous section used standard indicators aimed at measur-
ing the generosity of non-employment benefits and the strictness of employment
protection legislation. Such indicators, mainly compiled by the OECD, have the
great advantage of providing quantitative, time varying measures of labour market
institutions. In this section, we go beyond quantitative measures and try to under-
stand more deeply which type of reforms were indeed carried out and in which
countries during the last decade or so.
The main source of information on labour market reforms in this section is the
‘Social Policy Reform Inventory’ assembled by the Fondazione Rodolfo Debened-
etti. It draws on a variety of sources (including country economic reviews carried
out by OECD, Income Data Source studies, EC-MISSOC reports, etc.) and it
takes stock of reforms carried out in Europe in the field of non-employment benefits
(encompassing not only unemployment benefits, but also the various cash transfers
provided to individuals in working age) as well as employment protection. It
Table 8. Fixed-effects panel regressions of job-to-job flows on institutions
Yearly job-to-job flows as a percentage of total dependentemployment
(1) (2) (3) (4) (5)
Unemployment Benefit– OECD Index
)0.278()1.165)
)0.241()1.013)
)0.456*()1.917)
)0.461*()1.948)
)0.437*()1.827)
Employment ProtectionLegislation – OECDIndex
)3.413()0.989)
Employment ProtectionLegislation (RegularEmpl.) – OECD Index
)6.473()1.335)
)6.679()1.438)
)9.988*()1.915)
)10.956**()2.054)
Employment ProtectionLegislation (TemporaryEmpl.) – OECD Index
)1.148()0.652)
)0.655()0.387)
)0.458()0.271)
)0.891()0.484)
GDP growth rate )0.169()0.262)
)0.284()0.436)
)0.528()0.839)
)0.472()0.752)
)0.656()0.999)
Tax Wedge )1.531***()3.085)
)1.836***()3.390)
)1.908***()3.484)
Share Manufacturing Sectorover total employment
)2.617()1.372)
)3.045()1.559)
Product Market Regulation 3.024(0.947)
Constant 69.485***(4.396)
78.800***(4.275)
148.987***(5.174)
210.625***(3.952)
226.467***(4.150)
Number of observations 124 124 124 124 122Adj. R-Squared 0.11 0.12 0.20 0.22 0.22
Notes: Including year dummies from 1985 to 2004. t-statistics in parentheses.
Source: European Labour Force Survey.
434 TITO BOERI AND PIETRO GARIBALDI
39
INFLOWS & OUTFLOWS
• EPL non significativo
• UB non significativo
• EPL significativo solo per contratti a tempo indeterminato
• correlazione negativa con outflows
40
Table 9. Fixed-effects panel regressions of ‘Employment to Unemployment’ and of ‘Unemployment to Employment’transition probabilities on institutions
Flows Employment to Unemployment Flows Unemployment to Employment
(1) (2) (3) (4) (5) (6) (7) (8) (9) (10)
Unemployment Benefit –OECD Index
0.014 0.014 0.026 0.019 0.016 0.148 0.123 0.099 0.124 0.172(0.740) (0.747) (1.409) (1.041) (0.873) (1.075) (0.932) (0.743) (0.926) (1.242)
Employment ProtectionLegislation – OECD Index
0.421 1.390(1.576) (0.720)
Employment Protection Legislation(Regular Empl.) – OECD Index
0.291 0.338 )0.189 )0.188 )6.316*** )6.413*** )4.592* )4.573*(0.933) (1.140) ()0.572) ()0.564) ()2.919) ()2.964) ()1.847) ()1.840)
Employment ProtectionLegislation (Temporary Empl.) –OECD Index
0.206 0.123 0.115 0.081 1.294 1.465 1.492 2.166*(1.505) (0.935) (0.904) (0.565) (1.363) (1.524) (1.559) (2.029)
GDP growth rate )0.179*** )0.181*** )0.163*** )0.142*** )0.149*** 0.319 0.448 0.410 0.340 0.442()4.274) ()4.278) ()4.020) ()3.593) ()3.613) (1.055) (1.527) (1.390) (1.142) (1.437)
Tax Wedge 0.138*** 0.067 0.058 )0.283 )0.037 0.116(3.939) (1.643) (1.353) ()1.108) ()0.121) (0.365)
Share Manufacturing Sector overtotal employment
)0.364*** )0.368*** 1.256 1.315()3.190) ()3.200) (1.465) (1.535)
Product Market Regulation 0.124 )2.268(0.631) ()1.547)
Constant 1.710 1.518 )3.924** 5.888 6.080* 22.051** 38.102*** 49.269*** 15.400 9.025(1.347) (1.075) ()2.038) (1.638) (1.65) (2.400) (3.892) (3.508) (0.570) (0.329)
Number of observations 167 167 167 167 165 167 167 167 167 165R squared 0.32 0.32 0.389 0.434 0.434 0.281 0.341 0.347 0.358 0.37
Notes: Including year dummies from 1985 to 2004. t-statistics in parentheses.
Source: European Labour Force Survey.
BEYOND
EUROSCLEROSIS
435
41
EVIDENZE EMPIRICHE
42
• EPL sono significative sia per i contratti a tempo determinato che per i contratti a tempo indeterminato
• la correlazione è negativa
• UB sono significativi
• la correlazione è negativa
• le modifiche sulle EPL sono più incisive
43
come si sono riformati i paesi europei?
RIFORME
• possibile classificazione delle riforme in base a:
• EPL / UB
• regolamentazione / deregolamentazione
• riforme strutturali / riforme parziali
44
EMPLOYMENT PROTECTION LEGISLATION
• riguarda:
• regole dei contratti a tempo indeterminato o determinato
• tempi di preavviso per il licenziamento
• giusta causa per il licenziamento
• licenziamenti collettivi
45
ITALIA
• pacchetto Treu (1997):
• legalizzazione agenzie interinali
• apprendistato fino a 4 anni
• mercato del lavoro duale
• epl ridotto solo per contratti a tempo determinato
46
SPAGNA
• riduzione della protezione del lavoro a tempo indeterminato
47
FRANCIA
• riduzione delle regole per il licenziamenti collettivi
48
GERMANIA
• politiche stop and go:
• riforme radicali in direzione opposta
• effetti nulli
49
UNEMPLOYMENT BENEFITS
• generosità dei sussidi
• durata dei sussidi
• criteri di accesso ai sussidi
• criteri di mantenimento dei sussidi
• politiche attive
50
DANIMARCA
• riduzione dei sussidi da 7 a 5 anni
• nonostante la riduzione rimane un mercato con elevata sicurezza
• modello del welfare state
51
ITALIA
• sussidio di disoccupazione ordinario
• da 6 a 7 mesi
• basso livello di protezione
52
UK
• riduzione dei sussidi da 12 a 6 mesi
• estremizzazione del modello di capitalismo anglosassone
53
54
cosa ne pensano i lavoratori?
55
perceptions throughout the institutional transformations documented in this paper.
The longest survey available is the European Working Conditions Survey2 carried out in
1995, 2000 and 2005 among employees in the EU15. Figure 10 shows how the
percentage of workers reporting to be satisfied with their working conditions
evolved over time. As shown by the figure, only in Germany (where unemployment
increased throughout the period) and in the UK (where unemployment declined
mildly), the percentage of respondents declaring to be satisfied significantly
increased over time.3
Job satisfaction in EU Countries (% of employees expressing satisfaction with their working
conditions)
50% 60% 70% 80% 90% 100%
Greece
Spain
Italy
Portugal
France
Sweden
Netherlands
Germany
Luxembourg
Belgium
Austria
UK
Ireland
Finland
Denmark
EU15
20051995
Figure 10. Job satisfaction
Source: European Working Conditions Surveys, http://www.eurofund.europa.eu
2 Details are available at www.eurofound.europa.eu/ewco/surveys.3 Similar results are obtained when we look at the European Community Household Panel, a longitudinal survey (tracking the same
individuals over time), which was unfortunately discontinued in 2001. The proportion of individuals ‘fully satisfied with labour
market conditions’ declined by one percentage point per year at exactly the same time that unemployment was improving.
BEYOND EUROSCLEROSIS 439
SODDISFAZIONE DEI LAVORATORI
• breve periodo:
• insoddisfatti i precari
• soddisfatti i lavoratori a tempo indeterminato
• lungo periodo:
• insoddisfatti anche i lavoratori a tempo indeterminato
56
57
esiste una soluzione?
w ! rU "1# b$ % by % rF
where the wage is a weighted average between the worker’s outside option and
the productivity of the job y. The presence of firing costs, which negatively
affect the firm threat point in the bargaining problem, induces and increase in
wage. Using the above expression for the wage, the worker’s value reads
"r % d$W ! b"1# b$ % by % rF % dU : "2$
As shown by Equation (2), the value of employment is, via Nash bargaining,
increasing in both unemployment benefits, and firing taxes. Holding W con-
stant it is therefore possible to define a family of negatively sloped indifference
curves as those depicted in Figure 11 in the b, F space. In words, there is a
trade-off between generosity of unemployment benefits, parameterized by b,
and strictness of employment protection, parameterized by F. Reforms as those
discussed in Section 4 of the paper reduced both b and F, moving workers,
even those with a permanent contract, to a lower indifference curve, as indi-
cated by the dotted line in Figure 11.
From a normative standpoint, the documented increase in dissatisfaction of Euro-
pean workers carries with it some risk of reversal of the reforms that moved the
EU away from Eurosclerosis. Governments wishing to minimize such a risk should
probably think about exploiting the flexicurity trade-off, for example by extending
the coverage of unemployment benefits. Moving along the indifference curve of
b
F
w1
w0
Figure 11. The flexicurity tradeoff
Note: b is the generosity of unemployment benefits, F is the strictness of employment protection.
442 TITO BOERI AND PIETRO GARIBALDI
FLEXICURITY
• w = salario
• r = tasso di attualizzazione
• U = sussidi
•β = potere sindacale
• y = produttività del lavoro
• F = costo licenziamento
58
w ! rU "1# b$ % by % rF
where the wage is a weighted average between the worker’s outside option and
the productivity of the job y. The presence of firing costs, which negatively
affect the firm threat point in the bargaining problem, induces and increase in
wage. Using the above expression for the wage, the worker’s value reads
"r % d$W ! b"1# b$ % by % rF % dU : "2$
As shown by Equation (2), the value of employment is, via Nash bargaining,
increasing in both unemployment benefits, and firing taxes. Holding W con-
stant it is therefore possible to define a family of negatively sloped indifference
curves as those depicted in Figure 11 in the b, F space. In words, there is a
trade-off between generosity of unemployment benefits, parameterized by b,
and strictness of employment protection, parameterized by F. Reforms as those
discussed in Section 4 of the paper reduced both b and F, moving workers,
even those with a permanent contract, to a lower indifference curve, as indi-
cated by the dotted line in Figure 11.
From a normative standpoint, the documented increase in dissatisfaction of Euro-
pean workers carries with it some risk of reversal of the reforms that moved the
EU away from Eurosclerosis. Governments wishing to minimize such a risk should
probably think about exploiting the flexicurity trade-off, for example by extending
the coverage of unemployment benefits. Moving along the indifference curve of
b
F
w1
w0
Figure 11. The flexicurity tradeoff
Note: b is the generosity of unemployment benefits, F is the strictness of employment protection.
442 TITO BOERI AND PIETRO GARIBALDI
w ! rU "1# b$ % by % rF
where the wage is a weighted average between the worker’s outside option and
the productivity of the job y. The presence of firing costs, which negatively
affect the firm threat point in the bargaining problem, induces and increase in
wage. Using the above expression for the wage, the worker’s value reads
"r % d$W ! b"1# b$ % by % rF % dU : "2$
As shown by Equation (2), the value of employment is, via Nash bargaining,
increasing in both unemployment benefits, and firing taxes. Holding W con-
stant it is therefore possible to define a family of negatively sloped indifference
curves as those depicted in Figure 11 in the b, F space. In words, there is a
trade-off between generosity of unemployment benefits, parameterized by b,
and strictness of employment protection, parameterized by F. Reforms as those
discussed in Section 4 of the paper reduced both b and F, moving workers,
even those with a permanent contract, to a lower indifference curve, as indi-
cated by the dotted line in Figure 11.
From a normative standpoint, the documented increase in dissatisfaction of Euro-
pean workers carries with it some risk of reversal of the reforms that moved the
EU away from Eurosclerosis. Governments wishing to minimize such a risk should
probably think about exploiting the flexicurity trade-off, for example by extending
the coverage of unemployment benefits. Moving along the indifference curve of
b
F
w1
w0
Figure 11. The flexicurity tradeoff
Note: b is the generosity of unemployment benefits, F is the strictness of employment protection.
442 TITO BOERI AND PIETRO GARIBALDI
59
DISCUSSION
• ragionamento in equilibrio economico parziale e focalizzato esclusivamente sull’Europa
• riforme a rischio (Blanchard e Giavazzi)
• flexicurity molto costosa soprattutto in periodi di crisi
60
DISCUSSION
• insoddisfazione non dipende solo da mobilità ma anche dal salario (Barbara Petrongolo) e dagli effetti della globalizzazione (Francesco Caselli)
• manca un confronto con USA sull’eurosclerosi (Klaus Adams)
• non si considera il NAIRU (Daniel Leigh)
• assente ruolo e coordinamento del sindacato (Castelli e Menil)
• mercato del lavoro europeo non unitario (Georges de Menil)
61
DISCUSSION
• lavoro innovativo
• comparazione di mobilità e istituzioni fra paesi europei positiva (Petrongolo)
• focus su flussi e outflows (Petrongolo)
62