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Labor Taxes in Local Labor Markets: Evidence from Italian Regions

  • Giorgio Brunello

    ()

    (University of Padua, CESifo and IZA)

  • Claudio Lupi

    ()

    (University of Molise (Campobasso))

  • Patrizia Ordine

    ()

    (University of Calabria)

By focusing on the Italian experience, we ask whether the relationship between labor taxes and unemployment varies across regions. In spite of similar national labor market institutions, we show that this relationship is significantly stronger in the highly industrialized North than in the less developed South, where unemployment is much higher. An important source of variation in the regional responsiveness of unemployment originates from the fact that regional gross wages in the North increase more than in the South in response to a hike in labor taxes.

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Article provided by GDE (Giornale degli Economisti e Annali di Economia), Bocconi University in its journal Giornale degli Economisti e Annali di Economia.

Volume (Year): 64 (2005)
Issue (Month): 1 (September)
Pages: 29-54

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Handle: RePEc:gde:journl:gde_v64_n1_p29-54
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