Flexicurity pathway for Italy: learning from Denmark?

The aim of this work is to identify the advantages and risks of adopting flexicurity policies in Italy. In the first part, this paper analyzes flexicurity in Denmark, one of the leading countries in this field. Even though it is not possible to directly transpose policies from Denmark onto Italy, important insights are provided by such an analysis. In the second part, we focus on the possibility of countries with segmented labour markets, like Italy, adopting the first European flexicurity pathway, which suggests relying on contractual arrangements that gradually result in better working conditions to address labour market segmentations. To investigate such an issue, we additionally provide some evidence from an experimental analysis in which the level of unemployment level is determined endogenously and the level of effort made is observable by firms with a certain degree of uncertainty. Overall, the analysis suggests that, especially in countries where there is limited scope for increasing spending, these contractual arrangements can improve labour market efficiency by reducing the unemployment level and increasing workers' performance.