Abstract

This paper deals with the relation between labour market deregulation and the path of employment in Italy. A preliminary reconstruction of the theoretical debate is provided, based on the different views advocated by Neoclassical and post-Keynesian scholars. The second part of this paper focuses on empirical evidence, concluding that the increase in labour flexibility negatively affected the employment rate in the 2000s. Moreover, it is argued that, as unemployment increases, workers' bargaining power decreases not only in the labour market but also in the political arena, allowing the Government to implement further policies of labour flexibility. The evidence confirms this conjecture.