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The Nature of Regional Unemployment in Italy

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Author Info
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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Paper provided by Department of Economics, University of Kent in its series Studies in Economics with number 0607.

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Date of creation: Dec 2006
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Handle: RePEc:ukc:ukcedp:0607

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Postal: Department of Economics, University of Kent at Canterbury, Canterbury, Kent, CT2 7NP
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Related research
Keywords: Endogenous growth Okun's Law Italian regions

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Find related papers by JEL classification:
C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data
E24 - Macroeconomics and Monetary Economics - - Macroeconomics: Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
R10 - Urban, Rural, and Regional Economics - - General Regional Economics - - - General

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