The Cyclical Behavior of Shadow and Regular Employment
AbstractUsing data from the Italian Institute of Statistics, I examine the cyclical properties of three labor inputs - regular employees, regular self-employed, and underground workers. Results support the widespread view that, in Italy, the shadow employment functions as an improper tool for increasing the labor market flexibility. My analysis uncovers more details. While the contemporaneous correlation between shadow labor and output is significant, as time passes their association looses momentum. The opposite is found for regular employees, which show significant positive correlations with lagged output gaps only. Somewhat puzzling, self-employment seems to be the less sensitive to the course of business cycles. Possibly, hidden employment substitutes it as shock-absorber. Sectoral data tell different stories.
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Bibliographic InfoPaper provided by ISTAT - Italian National Institute of Statistics - (Rome, ITALY) in its series ISAE Working Papers with number 62.
Length: 44 pages
Date of creation: Jan 2006
Date of revision:
Underground economy; VAR models; Labor Market Flexibility; Business Cycle;
Other versions of this item:
- Maurizio Bovi, 2005. "The Cyclical Behaviour of Shadow and Regular Employment," Labor and Demography 0507011, EconWPA.
- C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models
- C53 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Forecasting and Prediction Models; Simulation Methods
- E26 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Informal Economy; Underground Economy
- H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion
- J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
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