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Interregional Migration, Human Capital Externalities and Unemployment Dynamics: Evidence from Italian Provinces

Listed author(s):
  • Roberto Basile

    ()

    (Seconda Università di Napoli)

  • Alessandro Girardi

    ()

    (ISTAT, Istituto Nazionale di Statistica)

  • Marianna Mantuano

    ()

    (ISTAT, Istituto Nazionale di Statistica)

  • Giuseppe Russo

    ()

    (Università di Salerno and CSEF)

The role of labour mobility on regional disparities is at the core of a heated debate: while standard competitive models posit that mobility works as an equilibrating device and reduces the unemployment, models featuring externalities lead to opposite conclusions. Against this backdrop, we present a simple two-region model adapted to the main features of the Italian North-South dualism that illustrates the effects of labour mobility with and without human capital externalities. We show that, when externalities are introduced, regional mobility may exacerbate regional unemployment disparities. Using longitudinal data over the years 2002- 2011 for 103 NUTS-3 Italian regions, we document that net outflows of human capital from the South to the North have increased the unemployment rate in the South and decreased the unemployment rate in the North. Our conclusions support the literature that finds an important role of regional externalities, and suggest that reducing human capital flight from Southern regions should be a priority.

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File URL: http://www.csef.it/WP/wp460.pdf
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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number 460.

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Date of creation: 08 Dec 2016
Handle: RePEc:sef:csefwp:460
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  1. Mark D. Partridge & Dan S. Rickman, 2006. "An SVAR Model of Fluctuations in U.S. Migration Flows and State Labor Market Dynamics," Southern Economic Journal, Southern Economic Association, vol. 72(4), pages 958-980, April.
  2. Brunello, Giorgio & Lupi, Claudio & Ordine, Patrizia, 2001. "Widening differences in Italian regional unemployment," Labour Economics, Elsevier, vol. 8(1), pages 103-129, January.
  3. Rebeca Jiménez-Rodríguez & Giuseppe Russo, 2008. "Institutional Rigidities and Employment Rigidity on the Italian Labour Market," Applied Economics Quarterly (formerly: Konjunkturpolitik), Duncker & Humblot, Berlin, vol. 54(3), pages 217-227.
  4. David Roodman, 2009. "A Note on the Theme of Too Many Instruments," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 71(1), pages 135-158, 02.
  5. Eswar S Prasad & Francesca Utili, 1998. "The Italian Labor Market; Stylized Facts, Institutions, and Directions for Reform," IMF Working Papers 98/42, International Monetary Fund.
  6. Pissarides, Christopher A & McMaster, Ian, 1990. "Regional Migration, Wages and Unemployment: Empirical Evidence and Implications for Policy," Oxford Economic Papers, Oxford University Press, vol. 42(4), pages 812-831, October.
  7. Rebeca Jiménez-Rodríguez & Giuseppe Russo, 2012. "Aggregate Employment Dynamics And (Partial) Labour Market Reforms," Bulletin of Economic Research, Wiley Blackwell, vol. 64(3), pages 430-448, 07.
  8. John Francis, 2009. "Agglomeration, job flows and unemployment," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 43(1), pages 181-198, March.
  9. Michelle Baddeley & Ron Martin & Peter Tyler, 2000. "Regional Wage Rigidity: The European Union and United States Compared," Journal of Regional Science, Wiley Blackwell, vol. 40(1), pages 115-141.
  10. Faini, Riccardo & Galli, Giampaolo & Gennari, Pietro & Rossi, Fulvio, 1997. "An empirical puzzle: Falling migration and growing unemployment differentials among Italian regions," European Economic Review, Elsevier, vol. 41(3-5), pages 571-579, April.
  11. Lee, Lung-fei & Yu, Jihai, 2010. "A Spatial Dynamic Panel Data Model With Both Time And Individual Fixed Effects," Econometric Theory, Cambridge University Press, vol. 26(02), pages 564-597, April.
  12. Mariangela Bonasia & Oreste Napolitano, 2012. "Determinants Of Interregional Migration Flows: The Role Of Environmental Factors In The Italian Case," Manchester School, University of Manchester, vol. 80(4), pages 525-544, 07.
  13. Windmeijer, Frank, 2005. "A finite sample correction for the variance of linear efficient two-step GMM estimators," Journal of Econometrics, Elsevier, vol. 126(1), pages 25-51, May.
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