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Sectoral Shifts, Diversification and Regional Unemployment. Evidence From Local Labour Systems in Italy

  • Roberto Basile
  • Alessandro Girardi
  • Marianna Mantuano
  • Francesco Pastore

Using local labour systems data, this work aims at assessing the effects of sectoral shifts and industry specialisation patterns on regional unemployment in Italy over the years 2004-2008, when huge worker reallocation caused by changes in the international division of labour occurred. Italy represents an interesting case study because of the high degree of spatial heterogeneity in local labour market performance and the well-known north-south divide. Furthermore, the presence of strongly specialised local labour systems (industrial districts) allows us to test whether industrial districts perform better than highly diversified urban areas thanks to the effect of agglomeration economies, or vice versa. Building on a semiparametric spatial autoregressive framework, our empirical investigation documents that sectoral shifts and the degree of specialisation exert a negative effect on unemployment dynamics. By contrast, highly diversified areas turn out to be characterised by better labour market performances.

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Paper provided by WIFO in its series WIFO Working Papers with number 411.

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Length: 42 pages
Date of creation: 01 Dec 2011
Date of revision:
Handle: RePEc:wfo:wpaper:y:2011:i:411
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  1. Floro Ernesto Caroleo & Francesco Pastore, 2010. "Structural Change and Labour Reallocation Across Regions: A Review of the Literature," AIEL Series in Labour Economics, in: Floro Ernesto Caroleo & Francesco Pastore (ed.), The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?, edition 1, chapter 2, pages 17-47 AIEL - Associazione Italiana Economisti del Lavoro.
  2. Lilien, David M, 1982. "Sectoral Shifts and Cyclical Unemployment," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 777-93, August.
  3. Luca Barbone & Domenico J. Marchetti & Stefano Paternostro, 1999. "The early stages of reform in Polish manufacturing," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 7(1), pages 157-177, March.
  4. Henry Overman & Diego Puga, 1999. "Unemployment Clusters Across European Regions and Countries," CEP Discussion Papers dp0434, Centre for Economic Performance, LSE.
  5. Roberto Basile & Alessandro Girardi, 2010. "Specialization and risk sharing in European regions," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 645-659, September.
  6. Simon, Curtis J & Nardinelli, Clark, 1992. "Does Industrial Diversity Always Reduce Unemployment? Evidence from the Great Depression and After," Economic Inquiry, Western Economic Association International, vol. 30(2), pages 384-97, April.
  7. Harry J. Holzer, 1989. "Employment, Unemployment and Demand Shifts in Local Labor Markets," NBER Working Papers 2858, National Bureau of Economic Research, Inc.
  8. Anna Maria Ferragina & Francesco Pastore, 2008. "Mind The Gap: Unemployment In The New Eu Regions," Journal of Economic Surveys, Wiley Blackwell, vol. 22(1), pages 73-113, 02.
  9. Neumann, George R & Topel, Robert H, 1991. "Employment Risk, Diversification, and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1341-65, November.
  10. Katharine G. Abraham & Lawrence F. Katz, 1987. "Cyclical Unemployment: Sectoral Shifts or Aggregate Disturbances?," NBER Working Papers 1410, National Bureau of Economic Research, Inc.
  11. Chiarini, Bruno & Piselli, Paolo, 2000. "Unemployment, Wage Pressure and Sectoral Shifts: Permanent and Temporary Consequences of Intersectoral Shocks," Journal of Policy Modeling, Elsevier, vol. 22(7), pages 777-799, December.
  12. Lucie Samson, 1985. "A Study of the Impact of Sectoral Shifts on Aggregate Unemployment in Canada," Canadian Journal of Economics, Canadian Economics Association, vol. 18(3), pages 518-30, August.
  13. G�ran Therborn & K.C. Ho, 2009. "Introduction," City, Taylor & Francis Journals, vol. 13(1), pages 53-62, March.
  14. Newell, Andrew T. & Pastore, Francesco, 2000. "Regional Unemployment and Industrial Restructuring in Poland," IZA Discussion Papers 194, Institute for the Study of Labor (IZA).
  15. Martin Robson, 2009. "Structural change, specialization and regional labour market performance: evidence for the UK," Applied Economics, Taylor & Francis Journals, vol. 41(3), pages 275-293.
  16. J. Paul Elhorst, 2003. "The Mystery of Regional Unemployment Differentials: Theoretical and Empirical Explanations," Journal of Economic Surveys, Wiley Blackwell, vol. 17(5), pages 709-748, December.
  17. Simon N. Wood, 2004. "Stable and Efficient Multiple Smoothing Parameter Estimation for Generalized Additive Models," Journal of the American Statistical Association, American Statistical Association, vol. 99, pages 673-686, January.
  18. J. Barkley Rosser, 2009. "Introduction," Chapters, in: Handbook of Research on Complexity, chapter 1 Edward Elgar.
  19. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
  20. Floro Ernesto Caroleo & Francesco Pastore (ed.), 2010. "The Labour Market Impact of the EU Enlargement. A New Regional Geography of Europe?," AIEL Series in Labour Economics, AIEL - Associazione Italiana Economisti del Lavoro, number 04.
  21. Augustin, Nicole H. & Musio, Monica & von Wilpert, Klaus & Kublin, Edgar & Wood, Simon N. & Schumacher, Martin, 2009. "Modeling Spatiotemporal Forest Health Monitoring Data," Journal of the American Statistical Association, American Statistical Association, vol. 104(487), pages 899-911.
  22. Roberto Basile & Luigi Benfratello & Davide Castellani, 2012. "Geoadditive models for regional count data: an application to industrial location," ERSA conference papers ersa12p83, European Regional Science Association.
  23. Beaudry, Catherine & Schiffauerova, Andrea, 2009. "Who's right, Marshall or Jacobs? The localization versus urbanization debate," Research Policy, Elsevier, vol. 38(2), pages 318-337, March.
  24. Simon, Curtis J, 1988. "Frictional Unemployment and the Role of Industrial Diversity," The Quarterly Journal of Economics, MIT Press, vol. 103(4), pages 715-28, November.
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