Job Search in Thick Markets: Evidence from Italy

I analyze empirically the effects of both urban and industrial agglomeration on men’s and women’s search behavior and on the efficiency of matching. The analysis is based on the Italian Labor Force Survey micro-data, which covers 520 randomly drawn Local Labor Market Areas (66 per cent of the total) over the four quarters of 2002. I compute transition probabilities from non-employment to employment by jointly estimating the probability of searching and the probability of finding a job conditional on having searched, and I test whether these are affected by urbanization, industry localization, labor pooling and family network quality. In general, the main results indicate that urbanization and labor pooling raise job seekers’ chances of finding employment (conditional on having searched), while industry localization and family network quality increase only men’s. Moreover, neither urban nor industrial agglomeration affect nonemployed individuals’ search behavior; although men with thicker family networks search more intensively.