Do “good neighbors” enhance regional performances in including disabled people in the labor market? A spatial Markov chain approach

Abstract

The purpose of this study was to examine whether the performance of Italian regions in providing employment of disabled people according to Law 68/99 can be affected by the performance of neighboring regions. Hence, we propose a two-step analysis focusing on Italian regions for the period 2000–2009. In the first step, we verify by means of Stochastic Frontier Approach that Central and Northern Italy regions are more efficient than Southern Italy ones in the matching process between demand and supply of jobs for disabled people. Then, the efficiency results are analyzed using a Markov Spatial Transition Matrix in order to provide insights into the transitions of regions between different efficiency levels, taking their local context into account. The results of this analysis show that good neighbors are important in promoting the improvement of regions’ performance. However, the effects produced by bad neighbors should not be underestimated, especially when they are concentrated in an area of the country and show a time-space persistence. The effect of a persistent dualism on the performance of Italian regions with respect to the application of Law 68/99 represents a problem for policy-makers. Hence, they must seriously consider it, especially when regions with low efficiency scores are surrounded by neighbors with poor efficiency score and show an unhealthy poorly performing labor market.