Labour Supply and Incentives to Work in Europe

Labour Supply and Incentives to Work in Europe

Edited by Ramón Gómez-Salvador, Ana Lamo, Barbara Petrongolo, Melanie Ward and Etienne Wasmer

Labour Supply and Incentives to Work in Europe highlights recent developments in the labour supply in Europe and gives a detailed assessment of their link with economic policies and labour market institutions. Despite major changes in European labour supply during the past few decades, the existing literature still lacks a comprehensive study of the relationship between labour supply and labour market institutions from a macro perspective.


Jan C. van Ours

Subjects: economics and finance, labour economics


Jan C. van Ours The chapter ‘Hiring incentives and labour force participation in Italy’ by Piero Cipollone, Corrado Di Maria and Anita Guelfi addresses the issue: to what extent marginally attached workers react to an increase in labour demand. The issue is policy relevant since marginally attached workers do not show up in unemployment statistics, but they do affect the way unemployment reacts to labour demand. If labour demand goes up, marginally attached workers enter the labour force and cause the decline in unemployment to be smaller than the increase in the number of jobs. To my knowledge there has not been a lot of research done on marginally attached workers. By nature it is difficult to investigate the behaviour of this type of worker; it is also not easy to distinguish the effect of a labour demand shock from the effect of other simultaneous changes in the economy. In their analysis the authors use information about the effects of an Italian policy measure where labour costs for one category of workers were reduced through a tax credit, while for other categories of workers there was no change in labour costs. They exploit this information as if it was a ‘natural experiment’. By studying the differences in labour force participation between the reduced labour costs category and the other categories, conclusions can be drawn about the effect of the tax credit on labour force participation. My comments focus on the empirical part of...

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