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The Nature of Regional Unemployment in Italy

Matteo Lanzafame ()

Studies in Economics from School of Economics, University of Kent

Abstract: Taking as a starting point the evidence of growing disparities in the 1977-2003 years, the paper investigates the pure hysteresis hypothesis for regional unemployment rates in Italy. Relying both on univariate and panel unit-root rests, we can confidently reject the unit-root hypothesis. The implication of this result is that, however persistent, shocks to regional unemployment will be temporary. We, then, proceed to estimate the NAIRU for each of the 20 Italian regions. Our estimates of the regional NAIRUs turn out to be fairly precise and allow us to draw two interesting conclusions. Firstly, the hypothesis of constant regional NAIRUs between 1977 and 2003 is supported by the data. Secondly, we find that there is a significant degree of heterogeneity among the regional NAIRUs. Finally, we investigate the cyclical behaviour of regional unemployment and find that region-specific demand shocks play a major role.

Keywords: Hysteresis; NAIRU; cyclical unemployment; Italian regions (search for similar items in EconPapers)
JEL-codes: C33 E24 R10 (search for similar items in EconPapers)
Date: 2006-12
New Economics Papers: this item is included in nep-geo and nep-mac
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Related works:
Journal Article: The nature of regional unemployment in Italy (2010) Downloads
Working Paper: The Nature of Regional Unemployment in Italy (2006) Downloads
Working Paper: The Nature of Regional Unemployment in Italy (2000) Downloads
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