Abstract
Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy
Highlights
This paper presents a general equilibrium model of regional unemployment dispersion based on the framework of Mortensen and Pissarides (1999)
This paper documents the government aversion toward internal mass migration that started to arise during the seventies, years in which the internal migration ceased
A general equilibrium matching model is developed and calibrated to replicated the relevant statistics that describe the main facts of the Italian labor markets
Summary
This paper presents a general equilibrium model of regional unemployment dispersion based on the framework of Mortensen and Pissarides (1999). Faini, Galli, Gennari and Rossi (1997) suggest a solution to the empirical puzzle that shows the internal migration in Italy decreasing while unemployment differentials among Italian regions increase They emphasize two major causes: high mobility costs and the inefficiencies in the job matching process. Increased aversion toward internal mass migration has been studied in other fields such as sociology and history, but it has never been analyzed in the economics literature, nor have been analyzed its important consequences These policies, together with progressive centralization of the wage setting process occurred in the seventies, can explain the unemployment gap we observed in the thirty years between after the 1970.
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