Labour Market Reform and the Beveridge Curve across Italian Regions

5.6 Concluding remarks: This chapter has used a matching theory approach to assess the impact on the Italian labour market of the so-called 1997 Treu Act (legge Treu). Although the Treu Act aroused considerable interest in the press and among labour market participants, to date extensive scientific analysis on its effects has not been conducted. Our study is also of some interest because the relationship between unemployment and vacancies has been very seldom analysed in the Italian literature, mainly because of the lack of official vacancy data. We have adopted a fairly recent empirical approach where the matching function, re-parameterised as a Beveridge Curve, is modelled and estimated as a production frontier. We have found largely favourable evidence as to the existence of a Beveridge Curve in the 1990s across the main territorial areas examined. Wide efficiency differences have been shown between the South and the rest of the country. Our evidence suggests that the Treu Act fostered an increase in the vacancy supply, especially in the North and in the Centre of Italy. However, for the South of Italy, and for unskilled labour in particular, some evidence has been found of a slight outward shift of the Beveridge Curve. As a consequence, it may be concluded from our evidence that the Treu Act brought about a reduction of unemployment in the more developed regions of the country, but did not greatly affect the efficiency of the Italian labour market. In the future, we intend to obtain more robust evidence on these matters by conducting our analysis at a finer level of territorial disaggregation.