Employability of Young Italian Males after a Jobless Period, 1989-1998

In Italy, about 28% of young males starting their first job in the private sector during 1989-1993 left their jobs in the first two years; some of them experienced job to job transitions but the majority of them experienced long jobless periods. A number of empirical studies suggest that the employability of jobless people deteriorates as their joblessness persists as consequence of human capital depreciation, demotivation and/or stigma effects. The aim of this paper is to investigate mechanisms that may produce employer stigmatization, discouragement, and human capital depreciation over the course of joblessness. Therefore, we analyze the existence and the causes of negative jobless duration dependence and the impact of a period of joblessness on wages as an indicator of the depreciation of human capital during joblessness or (to some degree) the wage effect of stigmatization. Sample selection and unobserved endogeneity issues are considered and a measure of jobless loss is suggested. Our results show the presence of a negative jobless duration dependence and a strong negative wage elasticity conted to the length of joblessness. Average jobless loss seems to be large._x000d_ _x000d_ Keywords: (to be added)