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The nature of regional unemployment in Italy

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  • Matteo Lanzafame

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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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Bibliographic Info

Article provided by Springer in its journal Empirical Economics.

Volume (Year): 39 (2010)
Issue (Month): 3 (December)
Pages: 877-895

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Handle: RePEc:spr:empeco:v:39:y:2010:i:3:p:877-895

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Keywords: Unemployment rate; Panel unit root test; Structural breaks; Cross-dependence;

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Cited by:
  1. Camilo Alberto Cárdenas Hurtado & María Alejandra Hernández Montes & Jhon Edwar Torres Gorron, 2014. "An Exploratory Analysis of Heterogeneity on Regional Labour Markets and Unemployment Rates in Colombia: An MFACT approach," BORRADORES DE ECONOMIA 011122, BANCO DE LA REPÚBLICA.
  2. Evangelia Papapetrou & Dimitrios Bakas, 2012. "Unemployment in Greece: evidence from Greek regions," Working Papers 146, Bank of Greece.
  3. Lanzafame, Matteo, 2013. "Crime and regional growth in Italy," MPRA Paper 44343, University Library of Munich, Germany.
  4. Marianna Belloc & Riccardo Tilli, 2010. "Gender Unemployment Catching-up: Empirical Evidence from Italian Regions," CESifo Working Paper Series 3300, CESifo Group Munich.
  5. Dimitrios Bakas & Evangelia Papapetrou, 2014. "Unemployment by Gender: Evidence from EU Countries," International Advances in Economic Research, Springer, vol. 20(1), pages 103-111, February.

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