January 2010

IZA DP No. 4724: Disposable Workforce in Italy

This paper explores the "disposable" patterns of workforce utilization in Italy, well under way before the cyclical downturn of the early 90's and before the main reforms of the Italian labor market. The term "disposable" reflects the fact that many young people enter the labor market, their services are "used" as a disposable commodity for a few years, after which they leave the labor market altogether and are no longer observable in the official (administrative) data. Workforce disposal is evident and dramatic: out of 100 new young entries, about 70 are still in the labor market 10 years after entry if their first job spell was at least one year long. For those – three times as many – who have started their career with a short employment spell (< 3 months), 10-year survival does not reach 50%. We show that the order of magnitude of workforce disposal is consistent with the official LFS youth unemployment rate increased by a reasonable estimate of the number of workers who end up in irregular, undetectable activities.