Creation, destruction and reallocation of jobs in italian firms: an analysis based on administrative data

We study the creation, destruction and reallocation of jobs in Italy over a period of almost forty years, until 2021. The size of gross job flows was large and in line with other developed economies. Every year, around 13 per cent of jobs are created and 12 per cent are destroyed. Most of this creation and destruction occurs within narrowly defined sectors, highlighting the crucial role that firm heterogeneity – rather than sectoral shocks – plays in driving job flows. Although employment at incumbent firms is more influenced by the business cycle, the entry and exit of firms both contribute, respectively, to one third of job creation and destruction. During the pandemic, and contrary to what has been documented for the US and the UK, Italy experienced a decline in excess job reallocation, entirely due to within-sector flows, while between-sector reallocation increased only slightly. ICT services and the construction sector received larger inflows of workers. The former did so as a result of the opportunities brought about by the shift to a digital economy, while the latter was prompted by hefty fiscal incentives targeted at the industry.