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HANDBOOK OF LABOR ECONOMICS, VOL 4B by David Card, Orley Ashenfelter

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Chapter 13

Institutional Reforms and Dualism in European Labor Markets*

Boeri Tito, Università Bocconi and Fondazione Rodolfo Debenedetti

Abstract

Most of the recent literature on the effects of labor market institutions on wages and employment draws on reforms used as natural experiments. This is a significant improvement with respect to the earlier literature which was based solely on cross-country variation in (highly imperfect) measures of these institutions. But this new literature lacks guidance from a body of theory acknowledging the fact that regulatory changes often create longlasting asymmetries, two-tier regimes, between a reformed and an unreformed segment of the labor market. This chapter provides new evidence on reforms in Europe, ...

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