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Emigration of High-Skilled Individuals due to Short-Term Contracts

Final Report Summary - EXODUS (Emigration of High-Skilled Individuals due to Short-Term Contracts)

Summary description of the project objectives
The large diffusion of temporary employment in a number of European countries such as Italy, Spain, France and Portugal, is the result of labour market reforms which liberalised the utilisation of temporary contracts with the objective to increase flexibility. These reforms led to the creation of a segmented market, where open ended contracts coexist with temporary contracts, being the former strictly regulated while the latter being associated with less rigid employment protection legislation. The deregulation process has therefore been implemented only at the margin, as the traditional rigid permanent contract has not been affected by the reforms. Such countries are known to be characterised by 'dual labour economies'. By increasing flexibility through the introduction of temporary contracts, the reforms have affected mainly young cohorts stepping for the first time into the labour market and weaker segments of the working population, who are the ones who are predominantly hired on a temporary basis, while leaving unchanged the situation of core, insider, permanent workers. Hence, while theoretically, the increased labour market flexibility should help increase labor force participation and employment, and improve efficiency and labour market opportunities, in practice if the liberalisation happens at the margin and not as part of a structural plan to reform the labour market as a whole, it might generate undesired effects. By promoting adverse selection, driving the better workers away, as the less productive workers are less mobile and more willing to take up temporary forms of employment, short-term contracts might actually increase the exodus of the most skilled, exacerbating the brain drain phenomenon. Moreover, if the utilisation of temporary contracts is more concentrated in specific geographical areas, which are less developed, it may lead to increased inequality and further depletion of disadvantaged areas. The diffusion of temporary contracts may increase commuting for work and specifically long-distance commuting, as job uncertainty about the future job prospects prevents individuals to migrate and settle in a new location. Overall, the purpose of EXODUS is to analyse how the diffusion of short-term contracts affects the individual decision to leave the area of residency in search for better work opportunities. Specifically, EXODUS focuses on investigating the employment condition, behavioural and mobility choices of young individuals with a high level of education, since their decisions may significantly exacerbate the brain drain phenomenon.

At the end of the EXODUS project’s duration the following have been obtained:

• A complete literature review on the regulations of each form of typical and atypical contracts in Italy, the associated benefits and the way each reform that has been implemented since the early 90s has affected each specific contract.
• A complete literature review on migration and analysis of the way the flows of migrants have changed over time.
• A new dataset has been constructed merging individual, household, labour and job-related information from several different sources, with detailed information at individual as well as at regional level.
• A new search and matching model has been developed, tailored to the issue of temporary employment in economies where search frictions represent strong barriers to achieve labour market efficiency.
• New data on changes of residence in Italy disaggregated by age and education from 2005 to 2015 has been obtained to study the inter-regional migration phenomenon in Italy.
• A new statistical methodology has been developed to identify the selection of migrants across Italian regions.
• Several scientific papers and a book chapter have appeared or are in preparation, based on the information collected and/or on the dataset we have constructed.
• A list of policy recommendation to improve labour market productivity and welfare at individual and aggregate level has been compiled.
• A dedicated website has been built, which provides information on our research to the scientific community.
• Several presentations at conferences and workshops across Europe (UK, Germany, Italy, France) have been given and invited seminar talks have been held.
• A workshop has been organised by the fellow to disseminate the results to the scientific community and a roundtable with policymakers has been setup to inform them about our policy suggestions based on our findings.
• The fellow has established several collaborations within the UK and beyond centred in the interests of migration and its relations with labour markets.
• The fellow lead a group of two research collaborators. She was responsible for the research direction and planning and for the team coordination. A number of students have been exposed to the topic of migration and they have focused their final projects on this subject.
• This grant has provided several opportunities to favour the integration of the fellow in Europe. It has provided valuable start-up funding to support staff and attend conferences. The fellow is currently on a tenured position at the host institution and hence her reintegration has been fully achieved.
• We provide updates on every piece of research related to the EXODUS project at