Does Employment Protection Affect Educational Mismatch?

The objective of this paper is to provide new evidence on the effect of employment protection on educational mismatch using a novel matched employer-employee flows dataset. To achieve this goal, we evaluate the way mismatch within firms has changed after the implementation of two important labour market reforms approved in Italy in the early 2000s, which reduced the EPL associated with temporary contracts. We find that both the absolute flows of mismatched workers and over-educated workers and the relative flows to the total employment flow decreased as a result of the implementation of the short-term contract reform, particularly among women. The apprenticeship reform instead had a significant impact on the mismatch flow, by increasing the flow of under-educated workers.