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Evaluating Asimmetries in Active Labour Policies: The Case of Italy

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  • Carlo Altavilla

    ()
    (CELPE University of Salerno, University of Napoli Parthenope)

  • Carlo Altavilla

    ()
    (CELPE University of Salerno, University of Napoli Parthenope)

Abstract

This paper aims at analyzing whether Active Labour Market Programs (ALMP) could have different effects on unemployment and employment dynamics according to the particular region where the program is implemented. To this end, the research analyses alternative theoretical and econometric models thought to capture the possible effects that active labour market policies might have on labour forces dynamics. The econometric methodologies implemented are the Generalized Method of Moment (GMM) and the Panel Vector Autoregression (P-VAR). The evidence emerging from the GMM models suggests that the effects of ALMP on unemployment are not similar across the Italian regions. It follows that some active programs are likely to exert a greater effect in the South than in the North. The results of the P-VAR estimated models are synthesized in the impulse response analysis and the forecast error variance decomposition. The impulse response analysis suggests that an increase in ALMP lead to: (i) a decrease in the unemployment rate, and (ii) significant increase in labour force participation. More interestingly, results obtained from the error-variance decomposition analysis show that unemployment movements are not driven by shocks in the ALMP and that, especially in the northern regions, atypical contracts shocks account for a substantial portion of unemployment dynamics.

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Bibliographic Info

Paper provided by CELPE - Centre of Labour Economics and Economic Policy, University of Salerno, Italy in its series CELPE Discussion Papers with number 84.

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Date of creation: Oct 2004
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Handle: RePEc:sal:celpdp:84

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Related research

Keywords: ALMP; Beveridge Curve; GMM; P-VAR;

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  1. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
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Cited by:
  1. Carlo Altavilla & Floro Ernesto Caroleo, 2011. "Asymmetric Effects of National-based Active Labour Market Policies," CSEF Working Papers 293, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.

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