Job Creation in Italy: Geography, Technology and Infrastructures

IGIER Working Paper No. 175

36 Pages Posted: 4 Dec 2000

See all articles by Alejandro Cunat

Alejandro Cunat

London School of Economics & Political Science (LSE) - Department of Economics; Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research; Centre for Economic Policy Research (CEPR)

Giovanni Peri

University of California, Davis - Department of Economics

Date Written: September 2000

Abstract

The recent dismal performance of overall job creation has left Italy, as of the end of the 90's, with very low participation and high unemployment rates. Moreover, Italy exhibits a large regional dispersion of those variables when compared to similar European Union economies. The present paper, using Census data on employment from 784 Local Labor Systems (LLS's), covering the whole Italian territory, analyzes job creation and its determinants for the 1981-1996 period. Local characteristics (input-output linkages, pool of local workers, technological spillovers), technological diffusion and infrastructure provision affect productivity in each LLS and, lacking wage flexibility, they determine differences in job creation across them. We analyze those characteristics across Italian LLS's and regions, developing measures for each of them and then we estimate their impact on job creation. The sizable (0.8% a year) difference in employment growth between the Northeast and the Southwest, as well as the overall differences across LLS's are explained up to one third by those characteristics. In particular, strong local input-output linkages across industries and fast growing transport infrastructures are shown to be important determinants of job creation. The southern Italian economy emerges in this analysis as rather differentiated within itself. Some parts of the Southeast show current characteristics compatible with good job creation, particularly if helped by investment in structures. Most of the Southwest, on the other hand, is still lacking local characteristics for self-sustained job creation and has been strongly penalized by the cut in public investment in the 90's.

JEL Classification: R0, R3, O1

Suggested Citation

Cunat, Alejandro and Peri, Giovanni, Job Creation in Italy: Geography, Technology and Infrastructures (September 2000). IGIER Working Paper No. 175. Available at SSRN: https://ssrn.com/abstract=248668 or http://dx.doi.org/10.2139/ssrn.248668

Alejandro Cunat

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom
+44 20 7955 6961 (Phone)

Bocconi University - IGIER - Innocenzo Gasparini Institute for Economic Research ( email )

Via Roentgen 1
Milan, 20136
Italy

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Giovanni Peri (Contact Author)

University of California, Davis - Department of Economics ( email )

One Shields Drive
Davis, CA 95616-8578
United States
530-752-3033 (Phone)
530-752-9382 (Fax)

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