“Disadvantaged Workers at the Labour Market”

Purpose – The purpose of this paper is to introduce the special issue on “Disadvantaged workers in the labour market” and to draw some policy implications that are common to the studies included in the special issue. Design/methodology/approach – The paper introduces several econometric methodologies adopted in the special issue. Such methodologies represent an excellent overview of the typical approaches developed by applied economists to address the issue under discussion. They include: dynamic probit models allowing for unobserved heterogeneity and endogenous initial conditions; propensity score matching; the non parametric Ñopo decomposition to take into account sample selection bias; endogenous switching models to estimate employment choice; and fixed effects models and Arellano and Bond dynamic panel estimator. Findings – The articles in the special issue highlight several common factors that make the disadvantage at the labor market emerge. The first factor is the recent financial crisis which especially affects young people. Differences in common support – generally due to segregation in low pay jobs – are also important. Several factors favor persistence of the disadvantage, namely the inefficiency of the educational system and the lack of financial support to the weakest groups. Practical implications – The paper adopts the EU definition of “disadvantaged workers”, namely workers who find it hard to enter the labor market without assistance. The authors show the relevance of the analysis produced in this special issue to design specific policies fine-tuned to the needs of disadvantaged workers. In addition, institutional reforms, and/or interventions on structural variables are also in order. Originality/value – The paper introduces a number of articles proposing innovations in the interpretation and application of a wide range of theoretical approaches and econometric methodologies.