Temporary/Permanent Workers' Wage Gap: A Brand-new Form of Wage Inequality?

By easing restrictions on the use of short-term contracts, the 30/2003 act represents contemporaneously the more extensive and the more radical policy aimed at introducing flexibility in the Italian labour market. By virtue of a difference-in-differences estimator, the paper provides an estimate of the impact of the 30/2003 reform on the wage gap across fixed-term and long-term employees. It will be given evidence that the policy has widened the wage differentials and the effect is particularly stronger to skilled workers compared with unskilled workers. These findings would suggest the existence of a possible brand-new form of wage inequality. Copyright 2010 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd.