  We propose a general methodology to measure labour market dynamics, inspired
by the search and matching framework, based on the estimate of the transition
rates between labour market states. We show how to estimate instantaneous
transition rates starting from discrete time observations provided in
longitudinal datasets, allowing for any number of states. We illustrate the
potential of such methodology using Italian labour market data. First, we
decompose the unemployment rate fluctuations into inflow and outflow driven
components; then, we evaluate the impact of the implementation of a labour
market reform, which substantially changed the regulations of temporary
contracts.
