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The nature of regional unemployment in Italy

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  • Matteo Lanzafame

Abstract

Taking as a starting point the evidence of growing disparities in the 1977-2003 years, the paper investigates the pure hysteresis hypothesis for regional unemployment rates in Italy. Relying both on univariate and panel unit-root rests, we can confidently reject the unit-root hypothesis. The implication of this result is that, however persistent, shocks to regional unemployment will be temporary. We, then, proceed to estimate the NAIRU for each of the 20 Italian regions. Our estimates of the regional NAIRUs turn out to be fairly precise and allow us to draw two interesting conclusions. Firstly, the hypothesis of constant regional NAIRUs between 1977 and 2003 is supported by the data. Secondly, we find that there is a significant degree of heterogeneity among the regional NAIRUs. Finally, we investigate the cyclical behaviour of regional unemployment and find that region-specific demand shocks play a major role.
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  • Matteo Lanzafame, 2010. "The nature of regional unemployment in Italy," Empirical Economics, Springer, vol. 39(3), pages 877-895, December.
    • Handle: RePEc:spr:empeco:v:39:y:2010:i:3:p:877-895
    DOI: 10.1007/s00181-009-0331-5
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    6. Omay, Tolga & Shahbaz, Muhammad & Stewart, Chris, 2021. "Is There Really Hysteresis in OECD Countries’ Unemployment Rates? New Evidence Using a Fourier Panel Unit Root Test," MPRA Paper 107691, University Library of Munich, Germany, revised 10 May 2021.
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    10. Kurmaş Akdoğan, 2015. "Unemployment Hysteresis and Structural Change in Europe," EY International Congress on Economics II (EYC2015), November 5-6, 2015, Ankara, Turkey 266, Ekonomik Yaklasim Association.
    11. Evangelia Papapetrou & Dimitrios Bakas, 2012. "Unemployment in Greece: evidence from Greek regions," Working Papers 146, Bank of Greece.
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    14. Chang, Ming-Jen & Su, Che-Yi, 2014. "Hysteresis versus natural rate in Taiwan's unemployment: Evidence from the educational attainment categories," Economic Modelling, Elsevier, vol. 43(C), pages 293-304.
    15. Lanzafame, Matteo, 2013. "Crime and regional growth in Italy," MPRA Paper 44343, University Library of Munich, Germany.
    16. Marianna Belloc & Riccardo Tilli, 2010. "Gender Unemployment Catching-up: Empirical Evidence from Italian Regions," CESifo Working Paper Series 3300, CESifo.
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    More about this item

    Keywords

    Unemployment rate; Panel unit root test; Structural breaks; Cross-dependence;
    All these keywords.

    JEL classification:

    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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