The differences between South, Central and North Italy read through a «new» formulation of Okun's law

Giovanni Busetta and D. Corso

Rivista economica del Mezzogiorno, 2012, issue 3, 557-580

Abstract: Italy's labour market is characterized by a considerable difference betweenSouthern and Central-Northern Italy, often leading to set these two markets asseparate in their functioning and only linked by the migration flow moving fromSouthern Italy to Central-Northern Italy.Such a functioning dualism can be further emphasized by the Okun's law,that is the empirical relation connecting the variations of unemployment rate tothe variations of real GDP's growth rate.The first aim of this analysis is to verify if the Okun's law is still valid in Italyfor the period considered and if there are any differences, as to this law validity,between the two sub-national markets - the Southern and the Central-Northernone. Secondly, the aim is to assess if there exist alternative indicators of marketlabour, understanding more effectively the relation investigated by Okun. As afurther innovation aspect, we want to propose a reading of the structural differencesbetween the Central-North and the South through an indicator whichhighlight the differences in terms of quantity and type of jobs created in thesetwo areas as well as may provide a useful key to the reading of performance andstructure differences of such two areas.From a methodological point of view, this survey will be carried out througha panel analysis using the Least Square Dummy Variables (LSDV) estimator,where spatial dummies are employed to estimate separately Central-North andSouth values. The data used are annual and concern Italian regions for the periodbetween 1993 and 2004.

Keywords: Okun's law; unemployment; economic growth; North-South gap. (search for similar items in EconPapers)
Date: 2012
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