Two-tier labor market reform and entry wage of protected workers: evidence from Italy

This study aims at investigating whether wages of workers entering positions entitled to employment protection are affected by the introduction of a twotier labor market regime. Difference-in-differences estimators—also combined with propensity score matching—are applied to repeated cross section microdata to evaluatetheimpactofareformderegulatingtheItalianlabormarketin2003.Theresultsare robust and show that after the policy implementation protected entrants experienced a reduction in earnings of about−4.5%.