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Hysteresis in unemployment: do structural breaks and aggregation matter? The case of Italy

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  • Gaetano Carmeci
  • Laura Chies

Abstract

In this paper we test for hysteresis in the Italian unemployment using two recently proposed unit root and stationarity tests which allow for the presence of structural breaks. The analysis conducted at the regional level reveals that the finding of hysteresis in national Italian unemployment appears to be mainly the result of the aggregation of regional trend-stationary series characterized by heterogeneous breaks. A structuralist view based on the presence of unequal regional unemployment natural rates seems therefore to emerge for Italy. Furthermore, the results of a standard structural unemployment model estimated for the Italian regions corroborate this view and offer an alternative prospect for the policy intervention design. In particular we find that the same institutional variables have very different power in explaining long run unemployment when heterogeneous breaks across regions are at work.

Suggested Citation

  • Gaetano Carmeci & Laura Chies, 2006. "Hysteresis in unemployment: do structural breaks and aggregation matter? The case of Italy," Politica economica, Società editrice il Mulino, issue 2, pages 233-258.
  • Handle: RePEc:mul:je8794:doi:10.1429/22413:y:2006:i:2:p:233-258
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    Cited by:

    1. BATTISTI,Michele, 2006. "Assessing persistence in the Italian rate of unemployment in presence of structural breaks and regional asymmetries, 1977 to 2004," Applied Econometrics and International Development, Euro-American Association of Economic Development, vol. 6(3).
    2. Dario Sciulli & Marcello Signorelli, 2010. "University-to-work transitions: the case of Perugia," Quaderni del Dipartimento di Economia, Finanza e Statistica 77/2010, Università di Perugia, Dipartimento Economia.

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