The Survival of Italian Individual Firms to Local Demand Shocks During the Great Recession

The Great Recessions a ected the Italian economy in a particularly severe way in terms of GDP collapse, increase in the unemployment rate and also in terms of number of rms that left the market. Moreover, because of its pe- culiar structural features, that is characterized by a business sector composed prevalently by a large number of micro and small rms, the Italian economy results to be particularly exposed to recession periods, especially so when these periods are prolonged and hit many sectors in the economy. The aim of this paper is to evaluate the impact of the Great Recession on the survival of rms for universe of Italian individual rms. Our main contributions consist in the estimation of an indicator to capture the local demand shocks in order to infer about the link between local demand shock, rms' characteristics and hazard of exit. General results show that the conditional and unconditional hazard of exit is larger for female, old and foreign-born entrepreneurs. However, when considering the e ect of local demand shocks, this appears to be stronger for female, old, Italian entrepreneurs and for entrepreneurs located in highly- exposed labour market areas.