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TheConvergence of the Italian Regions and Unemployment: Theory and Evidence

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  • Gaetano Carmeci
  • Luciano Mauro

Abstract

We explore the links between the halt of the convergence process of Italian regions at the beginning of the 1970s and the increase in regional unemployment dispersion. We consider a neoclassical exogenous growth model with an imperfect labor market and show that during the transitional dynamics the imperfections of the labor market negatively influence the output growth rate. In particular, the model implies that centralized bargaining is likely to set a national minimum wage that is too high with respect to the labor productivity of the less developed regions, resulting in a negative impact on their per capita output growth. We test the implications of the model on a regional panel data set using the GMM framework. Both our market distortion measure and the unemployment rate are found to significantly lower the growth rate of per capita output. Copyright 2002 Blackwell Publishers Inc.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Journal of Regional Science.

Volume (Year): 42 (2002)
Issue (Month): 3 ()
Pages: 509-532

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Handle: RePEc:bla:jregsc:v:42:y:2002:i:3:p:509-532

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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-4146

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Cited by:
  1. Marcela González Rivas, 2007. "The effects of trade openness on regional inequality in Mexico," The Annals of Regional Science, Springer, vol. 41(3), pages 545-561, September.
  2. Emiliano Giudici & André Mollick, 2008. "Convergence in the Eastern Caribbean States," The Annals of Regional Science, Springer, vol. 42(4), pages 893-909, December.
  3. Aiello, Francesco & Pupo, Valeria, 2012. "Structural funds and the economic divide in Italy," Journal of Policy Modeling, Elsevier, vol. 34(3), pages 403-418.
  4. Aiello, Francesco & Pupo, Valeria, 2009. "Capacità di gestione, efficienza istituzionale e impatto dei Fondi Strutturali in Italia
    [The Impact of Structural Funds in Italy]    ," MPRA Paper 14429, University Library of Munich, Germany.
  5. Francesco AIELLO & Valeria PUPO, 2009. "L'impatto della politica regionale dell'Unione Europea. Uno studio sulle regioni italiane," Rivista Italiana degli Economisti, SIE - Societa' Italiana degli Economisti (I), vol. 14(3), pages 421-454, December.
  6. Aiello Francesco & Pupo Valeria, 2011. "Structural Funds and Economic Divide in Italy," ERSA conference papers ersa10p136, European Regional Science Association.
  7. Francesco Aiello & Valeria Pupo, 2009. "L’Impatto Dei Fondi Strutturali In Italia," Working Papers 200901, Università della Calabria, Dipartimento di Scienze Economiche, Statistiche e Finanziarie (Ex Dipartimento di Economia e Statistica).
  8. Mauro, Luciano, 2004. "The macroeconomics of Italy: a regional perspective," Journal of Policy Modeling, Elsevier, vol. 26(8-9), pages 927-944, December.

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