Geographical Labor Market Imbalances

This chapter provides prima facie evidence of the geographical distribution of worker turnover within Italian regions as measured based on the longitudinal files of the labour force survey (LFS) for the period 2004–2010. It explains the stylized facts emerging from this enquiry with an interpretation based on the industrial change literature. Industrial turbulence, rather than labour market flexibility, is driving labour turnover within regions, as the correlation with the Lilien (positive) and the Herfindahl (negative) indices, respectively, shows. In other words, industrial change causes greater job destruction and flows into and out of unemployment, while, as also Alfred Marshall noted, the availability of more specialised districts could partly offset the diseconomies of specialisation in terms of greater exposure to external shocks, when the unit of analysis is sufficiently large, as it is in our case (NUTS1 and NUTS2). We also find that, at an individual level, the regional gap in turnover rates is due to regional differences in the gender, age and education attainment of the workforce, as well as the share of temporary work contracts and the size of firms.

This chapter is devoted to the investigation of spatial spillover effects of the regional unemployment in Germany. Due to historical reasons, the differences between eastern and western regions of Germany persist over time. We explore the differences in the determinants of the regional unemployment as well as the differences in spatial effects by estimating spatial models. We use panel data for 407 out of 413 German regions (using the NUTS III regional structure) for 2001 through 2009. In order to account for possible spatial interactions between regions, we use a spatial weighting matrix of inverse distances. We estimate static and dynamic models by the maximum likelihood estimation approach, developed by Anselin (Spatial econometrics: Methods and models, Berlin: Springer, 1988) specifically for spatial models and elaborated by Lee and Yu (Journal of Econometrics, 154, 165–185, 2010a; Regional Science and Urban Economics, 40, 255–271, 2010b). We reveal that the unemployment in western regions is more of disequilibrium nature, while the unemployment in eastern regions is more of equilibrium nature. Using System GMM approach, we estimate the extended specification of the dynamic model and find that the unemployment in eastern regions affects both the unemployment in western and eastern regions of Germany, whereas the unemployment in western regions has an impact only on other western regions.

In this chapter, we provide evidence on compensating differentials in the labor market from the largest transition economy, Russia. Using the NOBUS micro-data and a methodology based on the estimation of the wage equation augmented by aggregate regional characteristics, we show that wage differentials across Russian regions have a compensative nature. Russian workers receive wage compensations for living in regions with a higher price level and worse nonpecuniary characteristics, such as a relatively low life expectancy, a high level of air pollution, poor medical services, a colder climate, and a higher unemployment level. These compensations are not associated with the existing government system of compensating wage coefficients. After adjusting for regional amenities and disamenities, regional wages become positively correlated with interregional migration flows. According to our estimates, wage compensations along with differences in employment composition are able to account for about three-fourths of the observed variation in wages across Russian regions.

This chapter analyzes unequal regional development in Kazakhstan. Applying the nonlinear least squares (NLS) method in presence of spatial correlation, we estimate the convergence rate of wages across Kazakh regions for the period 2003–2009. The estimated convergence rate is about 3.5 % which is somewhat higher than the estimates obtained for the USA and Europe implying that half of the gap between regions is reduced in about 20 years. We do not find any significant effect of resource abundance on growth. However, human capital is an important factor contributing to growth. Our estimates indicate that a 1 % increase in the share of students increases the growth rate by 0.18 % points.

Using local labor systems (LLSs) data, we assess the effect of the local productive structure on employment growth in Italy during the period 1981–2008. Italy represents an interesting case study because of the high degree of spatial heterogeneity in local labor market performances and of the presence of strongly specialized LLSs (industrial districts). Building on semi-parametric geoadditive models, our empirical investigation allows us to identify important nonlinearities in the relationship between local industry structure and local employment growth to assess the relative performance of industrial districts and to control for unobserved spatial heterogeneity.

The aim of the present work is to estimate an aggregate production function for the 20 Italian regions by emphasizing the role that agglomeration externalities (localization externalities and urbanization externalities) and spatial spillovers have in influencing the technical efficiency of the production process. To this purpose, we use the stochastic frontier approach.

The results highlight the relevance and the positive impact that localization and urbanization externalities have in improving the efficiency level of the production process of Northern and Central Italian regions. Furthermore, spatial spillovers represent a source of development and growth for Northern, Central, and Southern regions. In particular, after considering spatial spillovers, we observe a reduction of the concentration and an increase of the diffusion process of efficiency among Italian regions. For some Northern and Central regions, we can observe that there are some richer regions and some poorer regions with regard to their capability to benefit from spatial spillovers.

This chapter analyzes the impact of agglomeration on product and process innovation in Italy. Our main goal is to gain a better understanding of the spatial dimension of innovative activities. Based on a unique firm-level source of data provided by ISFOL containing information on employers’ personal profiles, we attempt to shed more light into the black box of the local knowledge spillovers. To this end, besides standard density measures, we define and employ an original density indicator and perform a series of IV regressions.

Different from the main strands of the literature on this topic, which envisages positive knowledge spillover effects stemming from agglomeration, we do not find significant evidence that agglomeration fosters innovation. In particular, when small businesses are considered, a negative and significant effect arises. Such evidence suggests that in denser areas detrimental congestion effects tend to prevail and discourage innovation. Moreover, for this subsample of firms, the employers’ personal profile prove to be a relevant boost for innovation.

This chapter studies the effect of FDI in business services on total factor productivity (TFP) of Italian manufacturing firms, over the period 2003–2008. More precisely, the chapter tests the presence of vertical linkages between foreign business professionals and domestic manufacturing firms. Our results, robust to different specifications, show that foreign capital inflows in business services improve the performance of domestic manufacturing firms. This relationship is particularly strong in the case of high-tech sectors, such as mechanics and machinery. Traditional sectors, on the other hand, seem to be less sensitive to the availability of foreign business services in the same location.

The aim of this chapter is to conduct an empirical study of the patenting propensity at the European regional level using the OECD-REGPAT dataset. We use patent applications by inventor’s region as, in this case, linkage to the territory is stronger than using applicant’s region. Data analysis reveals the existence of a deep, uneven distribution of patent applications, R&D expenditure and human capital. Richer regions show higher levels of both private and public R&D expenditure as well as a consistent share of the total European patent applications. Starting from the analysis of these key variables, we proceed explaining the determinants of patenting propensity. The results substantially confirm the significant role of R&D expenditure on patenting activity: mainly the business enterprises, but also the government sector component. Human capital variables show similar positive effect, while average enterprise size seems not to play a determining role in patent applications.

The proportion of early school leavers in Italy is high by European Union standards. However, it is not uniformly distributed across the country: in Southern regions, it is almost double than in Centre-Northern area. This chapter goes beyond descriptive evidence and examines the conditional probability of leaving school with (at most) the compulsory schooling certificate in Italy using seven waves of Bank of Italy’s SHIW data, covering individuals born in the period from 1979 to 1995. Among various determinants, we focus on the role played by family origin. Our results show that youths born in the Centre-North with both parents from Southern Italy (second generation internal migrants) behave similarly to youths born and living in the South, so that they are more likely to drop out school earlier than comparable individuals born in the Centre-North with parents from the same area (natives). When only the household head is from the South, second generation migrants are similar to natives and the assimilation with native born in terms of schooling choices at the age of 14 is complete. Differences in family characteristics (education, financial conditions) are able to account for a large share of raw differences in education decisions between individuals born in Centre-North vs. South, as well as between natives and second generation migrants born in the Centre-North of Italy. The analysis of these dynamics over time shows that differences across groups of youths defined by their origin narrow since the mid-2000.

We study the relationship between the enrollment decisions of Italian secondary school graduates and the cost of participating in higher education. In particular, we look into the role of incentives, such as scholarship grants, and of the supply of under-priced accommodation which are policy tools in the hands of regional institutes (Enti Regionali per il diritto allo Studio Universitario, ERSU). We provide empirical evidence by estimating a conditional logit model using the survey of 2004 secondary school graduates issued by the Italian Institute of Statistics (ISTAT). We find that enrollment costs are determinant in students university choices: on average, the elasticity of the probability of enrollment to tuition fees is − 0. 062, the one to expected grants is 0. 028, and the one to expected rent is − 0. 022. Differences between regions are considerable: southern regions show lower elasticities, while small central and northern regions exhibit the largest ones.

Accounting for within-country spatial differences is a neglected aspect in many cross-country comparisons. This chapter highlights this importance in this empirical analysis of the impact of a country’s degree of informational and economic globalization on female employment in 30 OECD countries, using a micro pseudo panel of 110,000 persons derived from five waves of repeated cross sections from the World Values Survey, 1981–2008. I conjecture that informational globalization affects societal values and perceived economic opportunities, while economic globalization impacts actual economic opportunities. A traditional cross-country analysis suggests that the informational dimension of globalization but not the economic one increases the probability of employment for women—contradicting the Becker (1957) hypothesis of international competition mitigating discrimination in employment. However, accounting for subnational regional gender heterogeneity reveals that the impact of worldwide information exchange works rather at the regional level, while economic globalization (trade) increases female employment in general.

In this chapter, we assess the European Structural Funds’ effects on the economies of the 20 Italian administrative regions for the period 1989–2006. The principal novelties of this chapter are that the empirical analysis separately considers the effects on four sectors (agriculture, energy and manufacturing, construction, and services), and we employ a non-parametric FDH-VP to calculate Malmquist productivity indexes. This allows us to distinguish the Funds’ effects on factor accumulation from those on total productivity changes. Our evidence implies that the Funds had a weak, but significant, impact on total factor productivity change but virtually no effect on capital accumulation or employment. Different types of Structural Funds are found to have widely different influences, with the European Social Fund, arguably, having the strongest impact.

Self-employment has become an important source of employment in the last decades. Moreover governments have developed labour market programmes in order to foster self-employment. The capitalisation of unemployment benefits is a Spanish programme that gives the unemployed people the possibility to receive the contributory unemployment benefits in a lump sum payment in order to set up a business.

Our analysis supports the existence of spatial spillovers in regional labour markets; consequently, the model must include this spatial process explicitly. The results suggest that the magnitude of the direct effect is smaller but it is in accordance with the expected, since the possibility of capitalisation of unemployment benefits is not the main reason to move into the self-employment.

The goal of this chapter is an empirical verification of the hypothesis concerning the real wage equalization among different regions in the case of transition countries. In particular, we focus on Polish NUTS2 regions and for the first time, we apply regional PPP deflators in order to prove whether they may influence the results of the convergence analysis.

The issues concerning the evolution of regional labor market disparities within Central and Eastern European countries have been thoroughly discussed in many papers. Still, most of them have focused on the persisting differences in the regional unemployment rates. At the same time, the dispersion of wages across different locations and its evolution over time has been considered as one of the possible factors influencing spatial unemployment rate differentials. Less attention was though paid to the analysis of regional wage equalization process per se.

Up to now, the existing studies were based on wage data expressed either in current prices or constant ones but with price deflators calculated at the level of state. Here, we find that the application of regional PPP deflators significantly decreases the overall level of wage disparities across Polish regions (as compared to nominal wages). Nevertheless, it does not significantly change the overall pattern of their evolution. Hence, there is a tendency toward regional real wage divergence rather than equalization.