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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.

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.

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.

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.

The paper introduces a number of articles proposing innovations in the interpretation and application of a wide range of theoretical approaches and econometric methodologies.

The purpose of this paper is to investigate the determinants of the probability of low income for households with disabled members in Italy, over the period 2004‐2007, with special focus on the role of persistence.

Households with disabled members are compared with those without disabled members, and those with disabled members temporary limited. Alternative definitions of disability are considered. The probability of low income is estimated adopting dynamic probit models accounting for unobserved heterogeneity, state dependence and endogenous initial conditions.

Evidence is found of significant true state dependence for households with disabled members. However, true state dependence does not significantly differ from that of other households. The probability of low income for households with disabled members is also determined by some structural variables, such as employment of disabled individuals, living in the South, household's partner employment and household size.

In the short run, money transfer is effective to lift households with disabled members from low income and to prevent the risk of low income in the future. Structural policies are possibly relevant in reducing the long‐term risk of low income. These include interventions to favour employment of disabled members and development of caring services for disabled members to free family members for outside work.

Not much is known about how disability affects the conditions of households with disabled members. The paper contributes to this literature with a novel analysis of low income persistence, providing some policy suggestions.

The purpose of this paper is to assess the impact of financial crises on the youth unemployment rate (YUR). The authors consider different types of financial crises (systemic banking crises, non‐systemic banking crises, currency crises and debt crises) and different groups of countries, according to their income level.

After a review of the existing (theoretical and empirical) literature on the determinants of the YUR in general and at the occurrence of economic crises, the authors present empirical estimations on the impact of past financial crises on young workers. The relationship between financial crises and YUR is investigated by employing fixed effects panel estimation on a large panel of countries (about 70) around the world for the period 1980‐2005. The “persistence” over time of the impact is also investigated. Finally the Arellano‐Bond dynamic panel is estimated, confirming the significance of the results.

According to the authors’ empirical estimates, two key results are relevant: financial crises have an impact on the YUR that goes beyond the impact resulting from GDP changes; and the effect on the YUR is greater than the effect on overall unemployment. The inclusion of many control variables – including in particular GDP growth – does not change the sign and significance of the key explanatory variable. The results suggest that financial crises affect the YUR for five years after the onset of the crises; however, the most adverse effects are found in the second and third year after the financial crisis.

Although fully aware of the peculiarities of the last crisis, the authors believe that the econometric results facilitate a better understanding of the impact of the 2007‐2008 financial crisis on the youth labour market.

The main policy implication is that effective active labour market policies and better school‐to‐work transition institutions are particularly needed to reduce the risk of persistence and structural (long‐term) unemployment, since young people have been worst affected by the last crisis.

There are many studies on the characteristics and causes of youth unemployment; considerable research has also been carried out into the labour market impact of financial crises. This paper brings the two strands of literature together, by econometrically investigating the impact of financial crises on YUR.

The purpose of this paper is to quantify the wage gap between native and immigrant women in Spain, taking into account differences in their characteristics and the need to control for common support. If immigrant women are segregated in occupations with few native women, it is important to take this into account to analyse wage differentials between both collectives.

Microdata from the Continuous Sample of Working Histories (Muestra Continua de Vidas Laborales) on wages and other personal characteristics such as gender, country of origin, and age were used to apply the matching procedure and the decomposition of the wage gap, along the lines of Ñopo, for the analysis of wage differentials between native and immigrant women. The advantage of this procedure is that one can simultaneously estimate the common support and the mean counterfactual wage for the women on the common support (i.e. comparing native and immigrant women with similar observable characteristics). In addition, differences not only at the mean but also along the entire wage distribution can be described.

The results obtained indicate that, on average, immigrant women earn less than native women in the Spanish labour market. This wage gap is bigger when immigrant women from developing countries are considered, but the authors’ main finding is that an important part of this wage gap is related to differences in common support (i.e. immigrant women are segregated in certain jobs with low wages different from those occupied by native women). If the need to control for common support is neglected, estimates of the wage gap will be biased.

Studying the case of Spain is particularly interesting because it is a country with abundant and recent immigration. Immigrant women account for more than half of the total immigrants in Spain, and unlike other host countries, they come from a highly varied range of countries, with origins as diverse as Latin America, the Maghreb and Eastern Europe. To the authors’ knowledge, no other study has explicitly focused on the analysis of the wage differential of immigrant women in the Spanish labour market by taking into account the need to control for common support. Moreover, published papers illustrating the potentiality of Ñopo's methodology are also very scarce.

The purpose of this paper is to investigate the school‐to‐work transition of graduates in different fields of study, as well as to study programmes in three subsequent generations of graduates in the 2007 to 2009 period. The paper focuses on graduates from the new Bologna‐harmonised programmes and investigates their early career outcomes by comparing them to those of graduates from pre‐harmonised programmes.

The authors apply a probit regression to calculate differences in the probability of employment for different fields of study and propensity score matching to investigate the effect of different study programmes in each field of education on early career outcomes, such as being employed within the first three months of graduation and the first nine months of graduation.

The authors find that graduating from a particular field of study affects the probability of employment in all three years. In general, regardless of the field, the authors observe decreasing probabilities of employment in 2008 and 2009. Using propensity score matching, the authors estimate the effect of the new Bologna‐harmonised programmes on the probability of employment and find a statistically significant negative effect compared to counterparts who finished pre‐Bologna programmes. The findings are robust to the use of different matching criteria.

In the institutional framework of a tuition‐free system in higher education and collective bargaining in the labour market, performance indicators such as employability can provide relevant information regarding student choice and a proxy measure for the quality of higher education in each participating university. In addition, this provides a rare insight into the employability of graduates from Bologna‐harmonised programmes, as well as for a post‐transition country such as Slovenia.

By covering entire populations of full‐time graduates in 2007, 2008 and 2009 who entered the labour market for the first time after graduation, the authors calculate the probability of employment within the first three and nine months of graduation. This allows the authors to infer about the effect of the new Bologna‐harmonised programmes as well as the impact of the recent financial crisis. The paper offers rare evidence of the school‐to‐work transition in a post‐transition and tuition‐free country.

The purpose of this paper is to point to the inefficiency of the Italian educational system as a key factor of persistent differences between the distribution of incomes (skewed) and that of talents (normal), stated in the Pigou paradox. In fact, against the intention assigned to it by the Italian constitution, the educational system is designed in such a way to reinforce, rather than weaken, the current unequal distribution of incomes.

The authors study the socio‐educational background of AlmaLaurea graduates by way of correlation and regression analysis. The AlmaLaurea databank is the most important source of statistical information of its type in the country. The authors, consider several indicators of performance, such as the probability of getting a degree, the final grade achieved and the length of studies.

Parents’ educational level appears to be the main determinant of the grade achieved at secondary high school and at the university. The effect of family background on children's success at the university is not direct, but through the high school track. In fact, although any secondary high school gives access to the university, nonetheless lyceums provide students with far higher quality of education than technical and professional schools. Parental background affects also the length of studies, which suggests that the indirect cost of tertiary education is much higher for those with a poorer educational background and limited means.

Increasing the average educational level was one of the promises of the “3+2” university reform implemented in 2001. This objective has been achieved only in part, due to the continuing high indirect cost of tertiary education, which particularly affects individuals with limited means. More coordination in the interpretation and implementation of the aims of the reform would have prevented the main actors of the reform from failing it. School tracking should be reformed so as to allow more consideration for low school grades in the choice of parents and provide more on‐the‐job training to students in the professional/technical schools.

The paper proposes an interpretation of the Pigou paradox in Italy, based on the inefficiency of the university system, due to the peculiar school tracking and the ensuing high indirect cost of education. On this, the paper provides new circumstantial evidence based on the AlmaLaurea database almost ten years after the “3+2” reform.

The purpose of this paper is to explore the determinants of self‐employment among rural to urban migrants in China.

The analysis is based on a sample of migrant household heads from the 2008 Rural‐Urban Migration in China and Indonesia (RUMiCI) survey. An estimate of the wage differential between self‐employed and employed workers is obtained by means of an endogenous switching model and used to estimate the employment choice. The procedure is extended to account for migration selectivity bias, for alternative statuses before migration, and for different post‐migration employment histories.

Self‐employed migrants are positively selected with respect to their unobserved characteristics; their wages are substantially higher than what they would have obtained had they chosen paid work. Furthermore, even after accounting for the substantial heterogeneity across cities, industries, occupations, and after correcting for the migration selectivity bias, the wage differential is found to be an important determinant of self‐employment.

The finding that market imperfections do not constrain the self‐employment choice of migrants does not imply that reforms designed to eliminate institutional barriers are undesirable. Policy should target the reduction of gaps between urban residents and migrants (such as the household registration system – hukou), so that migrants can access new business opportunities which are currently a prerogative of urban residents.

The paper analyses the determinants of self‐employment using a recent survey based on a sample of rural‐to‐urban migrants in China. The key findings indicate that migrants who choose self‐employment are positively selected in terms of their unobservable characteristics. Moreover, the wage differential has a strong positive effect on the probability of choosing self‐employment. In the transition to a market economy, which is taking place in China, the identification of the determinants of self‐employment is crucial.