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By applying a stochastic production frontier approach, this paper investigates regional inefficiencies of job creation in Spain over the period 2006–2012. This paper represents a first attempt to test whether a more flexible labour market as designed by the 2010 reform reduces regional inefficiencies. Results suggest that the 2010 reform appears to have improved on average the efficiency of the Spanish labour market even if regional differences persisted over time. The paper also investigates the importance of local democracy for the labour market finding that local democracy positively influences regional efficiency. Mediante la aplicacion de un enfoque de frontera de produccion estocastica, este articulo investiga las ineficiencias regionales de la creacion de empleo en Espana durante el periodo 2006–2012. El articulo representa un primer intento de comprobar si un mercado laboral mas flexible, tal como fue disenado por la reforma de 2010, reduce las ineficiencias regionales. Los resultados sugieren que la reforma de 2010 parece haber mejorado, en promedio, la eficiencia del mercado laboral espanol, a pesar de la persistencia de diferencias regionales a lo largo del tiempo. El articulo investiga tambien la importancia de la democracia local para el hallazgo del mercado laboral de que la democracia local influye positivamente en la eficiencia regional. 本稿では、確立的生産フロンティアアプローチを用いて、2006年~2012年のスペインにおける地域の雇用創出の非効率性を検討する。今回、初めての試みとして、2010年の労働改革が意図したよりフレキシブルな労働市場により地域の非効率性が削減されたか否かを検証する。結果から、2010年の改革は、概して、経時的な地域間の差があったもののスペインの労働市場の効率を改善したようである。また、労働市場に対する地域の民主主義社会の重要性を検討したところ、それが地域の効率性に正の影響を及ぼしていることが考えられる。

We analyze the impact on wages of the adoption of a rent-sharing remuneration scheme aimed at making labor institutions more flexible. We work within a quasi-experimental setting referring to a sample of Italian companies before and after the introduction of the Treu Reform (1997). Our estimations confirm that this reform not only increased insider workers' wages via rent-sharing, but also fueled a σ−convergence process of the rent-sharing elasticity across the sectors at a different rate. Finally, we deliver a reasoned discussion of the consequences of implementing this reform on the Italian job market. This reform produced advances in the quality of job remuneration but it deepened a structural gap in the Italian labor market composition.

Social bonds and supportive relationships (social support) are widely recognised as being indispensable to healthy psychological functioning and wellbeing. Applying a multilevel approach to the 2001-2016 Household, Income and Labour Dynamics in Australia (HILDA) data, we assess the impact of social support experienced by the parents during an individual’s childhood on the individual’s capacity to establish adequate social support in adult life. The level of social support experienced by the parents is measured during childhood/adolescence. Our findings show that, in addition to individual characteristics and other parental outcomes, the social support experienced by parents is an important predictor of the level of social support experienced by young adults. In particular, the mother’s social support is an important predictor of the level of social support experienced by young female adults, while the father’s social support is an important predictor of the level of social support experienced by young male adults. This evidence is further supported in an alternative specification based on sibling observations accounting for family fixed effects, finding that some individuals experience more social support when they are aged in their twenties than other individuals as a result of the family environment in childhood. In particular, social support experienced by parents explains about 16% of the initial family variance experienced by siblings.

This paper is motivated by growing interest in noncognitive skills and the fact that many, if not most, economic and social actions require agents to plan ahead. More specifically, we use unique data from the US, UK, and Italy to show that two major classes of social resource—personality and social capital—are significant predictors of planning capacity. We use the data to estimate frontier models that help establish three empirical facts about the ability to plan. First, planning ability depends on a rich array of social resources including networks, the freedom to participate, neighbourhood co‐operation, and trust (social capital) and personality traits such as extroversion, conscientiousness, and emotional stability. Secondly, we provide evidence that some personalities are more efficient than others in using resources to help them plan. Thirdly, we develop evidence of three personality profiles, referred to as ‘over‐controlled’, ‘resilient’ and ‘under‐controlled,’ and highlight the fact that these three profiles benefit differently from various aspects of social resources capital. We discuss these findings and conclude that a wide range of economic policies designed to facilitate individual planning may need to allow for heterogeneities in social resources if they are to be successful.

We project medium to long term trends in labour force participation and employment for selected low-participation European Union countries (Italy, Spain, Ireland, Hungary and Greece), with Sweden as a benchmark, by means of a dynamic microsimulation model. By 2020, only Sweden will be above the Europe 2020 target of 75% employment rate, though Ireland will be close; the target will be approached by all other countries only at the end of the simulation period at 2050, with the exception of Hungary. Our forecasts, that fully take into account the uncertainty coming from the estimation of all the processes in the microsimulation, significantly depart from the official projections of the European Commission for two of the six countries under analysis.

This paper contributes to the literature that aims at identifying and measuring the impact of social context on individual-level outcomes. We focus on religious congregations (social groups with which Christian worshipers feel associated) and investigate congregation effects on individual poverty using U.S. data and a multilevel approach. In order to correct for selection effects, we model congregation choice using a multinomial logit model and subsequently incorporate correction components into the multilevel model of congregation effects. Our empirical results support the existence of congregation effects and, therefore, the importance of social context on individual poverty. We find that congregation size, recreational services, initiatives to integrate new members and behavior standards play important roles in shaping the probability that churchgoers experience poverty. Individual behavior (in terms of participation in the religious life of congregations) also matters. These findings are in line with the idea that congregations’ activities can foster social interactions and cooperation reducing the individual probability of experiencing poverty.

In this paper, we highlight knowledge as specific channel through which labour mobility affects conditional within-firm wage dispersion. We present a model in which workers acquire knowledge on the job and firms pursue a policy of learning-by-hiring. The latter generates workers flows that connect firms in a network. A firm's position in the network depends on its capacity to absorb the tacit knowledge developed by other firms in the economy. The model predicts that firms central to the network, those with the highest absorptive capacity of tacit knowledge, have the highest wage dispersion. Using 1995-2001 Veneto (a region of Italy) matched employer-employee data, we map workers flows between firms and build the network formed by all the firms. For each firm, we assess its network centrality. In our data conditional within-firm wage dispersion turns out to be increasing in network centrality, confirming the prediction of the model.

Les emplois a bas salaire et peu consideres socialement sont en general associes a un faible niveau de satisfaction au travail. Pourtant, ce n’est pas toujours le cas. Le but de cet article est d’eclairer les donnees qui ressortent de certains secteurs economiques et segments d’emplois, ou des travailleurs immigres (ou appartenant a des minorites ethniques) conjuguent bas salaires, faible consideration sociale et niveaux eleves de satisfaction au travail. Sur la base de donnees empiriques qualitatives tirees du secteur du nettoyage en Autriche, du secteur des dechets en Bulgarie et de l’aide aux personnes âgees en Italie, nous presentons quatre modeles d’interpretation de leur salaire par les travailleurs : (1) « C’est mieux que rien » – le manque d’alternatives ; (2) « C’est mieux qu’avant » – l’heritage des experiences passees ; (3) « C’est mieux que la-bas » – la comparaison avec le pays d’origine ; (4) « Ensemble, on s’en sort » – le salaire comme contribution au revenu familial. Nous concluons que des circonstances defavorables et une vision relativiste de leur salaire amenent les travailleurs a revoir leurs aspirations a la baisse.

By applying a stochastic production frontier approach to the matching process of unemployed and vacancies, this paper provides novel detailed insights into the process of job creation in Spain over the 2006-2012 period. The methodology produces estimates of the relative importance of demand and supply factors for the creation of new jobs, and of regional inefficiencies of job creation. This paper represents a first attempt to test whether a more flexible labour market as designed by the 2010 reform affects the matching efficiencies. We also investigate the possible link existing between local democracy (as factor influencing labour market governance) and inefficiency, handling endogeneity. Results suggest that the matching process was inefficient before the 2008 crisis. Efficiency increased during recession/rebound probably as consequence of policies aims to strengthen the economic system. In particular, the 2010 reform appears to have improved on average the matching efficiencies. Local democracy positively influences efficiency (and the effect is substantially higher when endogeneity in the inefficiency is handled). Despite these considerations, regional disparities in matching efficiencies persisted over time. Therefore, these results support the recommendation of further reducing matching inefficiencies before implementing policies aimed to increase the stock of vacancies at least in regions characterized by persistent inefficiencies.

Using the 2008‐2011 EU‐Statistics on Income and Living Conditions data, we implement a dynamic three‐level model to analyze poverty persistence in 26 EU countries. Our aim is to understand why an individual experiencing poverty today is much more likely to experience it again. We innovate with respect to the existing literature by disentangling the effects of observed and unobserved heterogeneity at country level on the process that may generate poverty persistence. In particular, after controlling for socio‐economic factors, including those related to qualitative and quantitative indicators of the welfare state, we analyze for the first time how the size of the middle class in each country affects current individual risk of poverty and its dynamics. Our findings show that the risk of poverty is negatively related to the quality of government activity to social expenditure and to the size of the middle class. Similarly, we show that the impact of past records on current poverty levels may be stronger (weaker) when institutional quality is low (high). This also indicates that good institutions and satisfactory social expenditure may help reducing the adverse current and future impact of experiencing poverty for any level of per capita income and middle class size. Policy implications are also discussed.

There is growing interest in the analysis and measurement of social exclusion, to complement the static and dynamic literature on income poverty. On theoretical grounds, social exclusion and income poverty are seen as different processes, but with closely interrelated dynamics. However, our empirical understanding of the way these two processes dynamically interact at the individual level is still very limited. To shed some light on the issue, we use a dynamic bivariate probit model, controlling for unobserved heterogeneity and Wooldridge (2005)-type initial conditions. Both first and second order Markov dynamics are examined. We estimate the model using the Italian sample of the ECHP, waves 1-8, and find a sizable extent of state dependence in both poverty and social exclusion. Moreover, there are dynamic cross-effects, implying that poverty and social exclusion are mutually reinforcing. Social policies aimed at eradicating poverty and avoiding individuals’ social and economic marginalization should take these interaction effects explicitly into account.

This paper attempts to combine the analysis of wage (income) polarization with that of wage (income) mobility. Using the polarization index PG recently proposed by Deutsch et al. (2007) it shows that, when taking the identity of the individuals into account (working with panel data), a distinction can be made between a change over time in polarization that is the consequence of "structural mobility" (change over time in the overall, between and within groups inequality) and a change in polarization that is the sole consequence of "exchange mobility" (changes over time in the ranks of the individuals). This approach is then applied to the 1985-2003 Work Histories Italian Panel (WHIP), an employeremployee linked panel database developed by the Italian Social Security administrative sources. The empirical investigation attempts to improve our understanding of labor market segmentation in Italy, whether the groups are defined on the basis of the individual wages or when they are derived from other criteria such as white versus blue collar workers.

The typical ingredients of energy reforms in the European Union (EU) in the 1990s were full or partial privatization, vertical disintegration and liberalization. This paper analyses the effects of energy reforms on the probability of households experiencing deprivation, defined as difficulty in paying the bills. We use two sets of micro-data. First, the European Community Household Panel (ECHP), a large EU survey, offers evidence on people who report having been unable to pay scheduled utility bills. We consider seven European countries: Denmark, Belgium, France, Ireland, Italy, the Netherlands and Spain, and eight ECHP waves (1994–2001), with around 28,000 observations. Second, we also use micro-data from the European Statistics on Income and Living Conditions survey (EU-SILC) 2004–2005, with around 84,000 observations. The countries included are Belgium, France, Ireland, Italy, Spain, Austria, Finland, Luxembourg, Norway and Sweden. As indicators of regulatory reforms in the same countries and years we use ECTR (formerly REGREF), a database provided by the OECD. In both samples we find evidence that privatization increases the probability of households experiencing deprivation. Vertical disintegration has a similar effect and also increases the persistence in the status of household deprivation. Liberalization has no statistically significant effect. We discuss possible interpretations of these findings.

Dynamic microsimulation modelling involves two stages: estimation and forecasting. Unobserved heterogeneity is often considered in estimation, but not in forecasting, beyond trivial cases. Non-trivial cases involve individuals that enter the simulation with a history of previous outcomes. We show that the simple solutions of attributing to these individuals a null effect or a random draw from the estimated unconditional distributions lead to biased forecasts, which are often worse than those obtained neglecting unobserved heterogeneity altogether. We then present a first implementation of the Rank method, a new algorithm for assigning individual effects to the simulation sample. Out-of-sample validation of our model shows that use of the Rank method significantly improves the quality of the forecasts.

In this paper, we analyze the wage effects of the adoption of a labor reform aiming at making labor institutions more flexible. We are working with a quasi-experimental setting referring to a sample of Italian companies before and after the introduction of the Treu Reform (1997). Our IV-estimations confirm that this reform not only increased workers’ wages via rent sharing, but also fuelled a convergence process of the elasticity between rent sharing and wages across the sectors.

In Italy, employment in waste collection has been widely used to reduce unemployment and create political consensus (especially in the South). Having secure jobs allows people to achieve income stability. But, income is just a means to an end and the goods and services or ‘commodities’ it buys are simply particular ways of achieving the freedom or valuable opportunities (capabilities) to lead the kind of lives the people want to lead, to do what they want to do and be the person they want to be. The aim of this paper is evaluate employment in waste collection as policy able to expand the quality and the quantity of people’s opportunities (capabilities). We present qualitative empirical evidence that public jobs in waste collection lead to the expansion of the capability sets improving people well-being. On the other hand, health problems related to physically demanding jobs can limit the capability sets. Moreover, workers experience limitations in the quality and the quantity of opportunities they face; but, they do not perceive such limitations since their aspirations are also limited and, therefore, they do not have stimulus to improve the negative aspects of their life.

Dynamic microsimulation modeling involves two stages: estimation and forecasting. Unobserved heterogeneity is often considered in estimation, but not in forecasting, beyond trivial cases. Non-trivial cases involve individuals that enter the simulation with a history of previous outcomes. We show that the simple solutions of attributing to these individuals a null effect or a random draw from the estimated unconditional distributions lead to biased forecasts, which are often worse than those obtained neglecting unobserved heterogeneity altogether. We then present a first implementation of the Rank method, a new algorithm for attributing the individual effects to the simulation sample which greatly simplifies those already known in the literature. Out-of-sample validation of our model shows that correctly imputing unobserved heterogeneity significantly improves the quality of the forecasts.

This paper analyzes the implications of unobserved heterogeneity in discrete-time, discrete-choice microsimulation models. We compare the predictions coming from simple pooled probit estimates with those obtained using random effect dynamic probit models, in a dynamic microsimulation of household formation and labor supply in Italy. We show that failing to account for unobserved heterogeneity has important quantitative consequences, which are often neglected in empirical microsimulation work.

In Italy, about 28% of young males starting their first job in the private sector during 1989-1993 left their jobs in the first two years; some of them experienced job to job transitions but the majority of them experienced long jobless periods. A number of empirical studies suggest that the employability of jobless people deteriorates as their joblessness persists as consequence of human capital depreciation, demotivation and/or stigma effects. The aim of this paper is to investigate mechanisms that may produce employer stigmatization, discouragement, and human capital depreciation over the course of joblessness. Therefore, we analyze the existence and the causes of negative jobless duration dependence and the impact of a period of joblessness on wages as an indicator of the depreciation of human capital during joblessness or (to some degree) the wage effect of stigmatization. Sample selection and unobserved endogeneity issues are considered and a measure of jobless loss is suggested. Our results show the presence of a negative jobless duration dependence and a strong negative wage elasticity conted to the length of joblessness. Average jobless loss seems to be large.

This report is one of the outputs resulting from Workpackage 4, "Social and professional integration" of the WALQING project, SSH-CT-2009-244597 (www.walqing.eu).

Poverty and informal employment are often regarded as correlated phenomena. Many empirical studies have shown that informal employment has a causal impact on household poverty, mainly through low wages. Yet other studies focus on the reverse causality from poverty to informality, arising from a range of constraints that poverty poses to job holders. Only recently have empirical researchers tried to study the simultaneous two-way relationship between poverty and informality. However, existing studies have relied upon cross sectional data and static econometric models. This paper takes the next step and studies the dynamics of poverty and informality using longitudinal data. Our empirical analysis is based on a bivariate dynamic random effect probit model and recent panel data from Argentina. The results show that both poverty and informal employment are highly persistent processes at the individual level. Moreover, positive spillover effects are found from past poverty on current informal employment and from past informality to current poverty status, corroborating the view that the two processes are also shaped by interrelated dynamics.

According to Sen’s capability approach, objective working conditions can be seen as functionings (i.e. things experienced by the individuals). The corresponding capability set includes all sets of alternatives working conditions existing in the society for a given kind of job. Observing the existing capability set of working conditions, individuals formulate expectations about their own working conditions. These expectations might create biases in the realistic perceptions of job satisfaction. Our aim is to study the determinants of worker perceptions of quality of work in EU Countries. In particular, we shed light on the complex relationship that exists between job satisfaction, objective working conditions and workers expectations. First, we determine which objective working conditions impact on the level of job satisfaction. Second, we test the existence, and the signs, of biases in the realistic perception of job satisfaction due to the existence of expectations. Third, we test if expectations are affected by the working conditions actually experienced in the job place. From a technically point of view, we estimate a two-tiered stochastic frontier model. We find that expectations biases exist. High expectations have stronger effects in reducing job satisfaction than low expectation in increasing job expectations. Finally, expectations are affected by the working conditions actually experienced by the workers.

Social exclusion can be defined as a process leading to a state of multiple functioning deprivations. Cross-sectional headcount ratios of social exclusion may overstate the extent of the problem if most individuals do not remain in the same state in successive years. To address this issue, we need to focus on mobility. Therefore, the aim of this paper is to analyse changes in the individual levels of social exclusion focusing on the extent to which individuals change place in social exclusion distribution. We find that social exclusion is partially transitory and, therefore, we suggest a more restrictive definition of social exclusion.

Economic theory and empirical evidence clearly show that social exclusion dimensions are inter-related. Notwithstanding that, dimensions are usually assumed independent from one another in the economics literature. In this paper we explore the inter-dependency of social exclusion dimensions and study the transmission of deprivation among them. In particular, we propose the use of stochastic epidemic models, which are typically used to study the transmission of infectious diseases, to the analysis of deprivation diffusion among social exclusion dimensions with the aim of acquiring a deeper understanding of the mechanism governing deprivation transmission. We also provide an empirical implementation that investigates the consequences, in terms of future deprivation, for Italian and Spanish women of being jobless, as opposed to doing paid work. We also investigate the consequences of being unemployed versus being inactive. We conclude that working seems to act as a protective mechanism to shocks. In addition, conditional on losing one’s job, women who subsequently search for a job (unemployed) are more likely to experience contagion than women who do not search (inactive).

In the late 1990s many European countries started comprehensive restructuring of their energy industries, the typical ingredients of the reforms are full or partial privatization, vertical disintegration, liberalization. In this paper we focus on the way in which energy sector reforms affect social affordability. The aim of this paper is to analyze the effects of energy reforms on the household probability of experiencing utilities deprivation (that is, to be unable to pay scheduled utility bills) in seven European Countries: Denmark, Belgium, France, Ireland, Italy, Netherlands and Spain. The period of analysis is 1994-2001. We also explore the dynamics of utilities deprivations focusing on the causes behind deprivation persistence. We differentiate between household heterogeneity and true state dependence. Then, controlling for observed and unobserved heterogeneity, we use the magnitude of average partial effects to investigate the relevance of any state dependence and the impact of energy sector reforms on the probability of experiencing utilities deprivations and on state dependence. We find evidence that vertical disintegration in the energy sector and privatization increase the household probability of experiencing utilities deprivation. Moreover, vertical disintegration also increases the household persistence in the status of deprivation.

The aim of this paper is to analyse the causes leading to social exclusion dynamics. In particular, we wish to understand why an individual experiencing social exclusion today is much more likely to experience it again. In fact, there are two distinct processes that may generate a persistence of social exclusion: Heterogeneity (individuals are heterogeneous with respect to some observed and/or unobserved adverse characteristics that are relevant to experiencing social exclusion and persist over time) and true state dependence (experiencing social exclusion in a specific time period, in itself, increases the probability of undergoing social exclusion in subsequent periods). Distinguishing between the two processes is crucial since the policy implications are very different. The results suggest that both individual heterogeneity and true state dependence are related to the probability of experiencing social exclusion. © Springer Science+Business Media B.V. 2006.

The aim of this paper is to analyze the wage differentials associated with non-pecuniary working conditions (distance to job, environment conditions, working times) using objective and subjective data. In fact, the individual can be compensated for unsatisfactory working conditions by higher wage (compensating wage differentials theories). Or, if productivity is positively associated with satisfaction, higher wages can be offered to more productive workers, that are workers with higher level of satisfaction (wage efficiency theories). Therefore, we estimate a wage equation with variables that capture workers’ subjective view about their current working conditions allowing for unobserved individual heterogeneity. Finally, we quantify any systematic differences in the wage differentials associated with nonpecuniary working conditions by occupation in order to infer whether any apparent productivity effects of flextime may be relatively greater than the hedonic effects for certain occupations.

Social exclusion can be defined as a process leading to a state of multiple functioning deprivations. Cross-sectional headcount ratios of social exclusion may overstate the extent of the problem if most individuals do not remain in the same state in successive years. To address this issue, we need to focus on mobility. Therefore, the aim of this paper is to analyse changes in the individual levels of social exclusion focusing on the extent to which individuals change place in social exclusion distribution.