February 2016

IZA DP No. 9783: Levelling the Playing Field: The Effects of Slovenia's 2013 Labour Market Reform

Matija Vodopivec, Suzana Laporsek, Milan Vodopivec

We examine the effects of a 2013 labour market reform in Slovenia which made permanent contracts less restrictive and fixed-term contracts more restrictive. Using matched employer-employee database covering the entirety of Slovenia's labour market participants, we compare the difference in outcomes for workers employed under permanent vs. fixed-term contracts before and after the legislative change. We find that the reform achieved both its stated goals of reducing labour market segmentation and improving access to jobs for vulnerable groups: (i) it increased the probability of accessing permanent jobs via transitions from both fixed-term jobs and unemployment, and (ii) it improved the accessibility of permanent jobs for both young and old workers.