A spatial analysis on Italian unemployment differences

Abstract

Using spatial econometric models, this paper focuses attention on the spatial structure of provincial unemployment disparities of Italian provinces for the year 2003. On the basis of findings from the economic literature and of the available socio-economic data, various model specifications including supply- and demand-side variables are tested. Further we use ESDA analysis as equivalent to integration analysis on time series; therefore it is applied on each variable, dependent and independent, involved in the statistical model. The suggestions of ESDA lead us to the most adequate statistical model, which estimates indicate that there is a significant degree of neighbouring effect (i.e. positive spatial correlation) among labour markets at the provincial level in Italy; this effect is present notwithstanding we controlled for local characteristics. The unemployment shows a polarized spatial pattern that is strongly connected to labour demand and to a much lesser extent to the share of young population and economic structural composition.