The nature of regional unemployment in Italy |
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Authors: | Matteo Lanzafame |
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Institution: | 1. Dipartimento di Economia, Statistica, Matematica e Sociologia “V. Pareto”, Università degli Studi di Messina, Via T. Cannizzaro 278, 98122, Messina, Italy
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Abstract: | Taking as a starting point the evidence of growing disparities for most of the 1984–2007 period, this article investigates
the nature of regional unemployment in Italy. In particular, we assess whether the Italian regional unemployment rates contain
a unit root and are, thus, subject to pure hysteresis, considering as alternative hypotheses both a linear and a non-linear
stationary process. For that purpose, we employ three recently developed panel unit-root tests, taking account of structural
breaks, cross-section dependence and non-linearities. Contrary to previous studies in the literature, our results reject the
pure hysteresis hypothesis and support the characterisation of regional unemployment in Italy as a stationary but non-linear
process, subject to multiple equilibria, in line with the ‘structuralist hypothesis’ advanced by Phelps (1994). |
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