Abstract
The aim of this paper is to measure the effect of the interaction between age for the population of males and females aged 18 to 74 and region-level GDP per capita on labour market transition probabilities in Italy. We compare different occupational states in a sample of males and females who remained in their region of residence at two points in time (12 months apart). We estimate the transition probabilities using a flexible hierarchical logit model with interaction effects between worker age and region-level GDP per capita. We apply this model using longitudinal data from the Italian Labour Force Survey that cover the 2004–2013 period. We find empirical support for the assumption that people in the same age cohort have different labour market opportunities based on the level of GDP per capita in their region of residence. These differences are particularly relevant among younger workers.
Highlights
The global financial crisis of 2007–2008 was a significant economic shock
4 Results we present the results of the estimated flexible hierarchical logit models with interaction effects
We note that the use of a parametric multinomial logit (MNL) approach rather than a flexible hierarchical logit model leads to predicted probabilities that can be either underestimated or overestimated under the assumption of linear dependence between the continuous covariates of interest and the outcomes
Summary
The global financial crisis of 2007–2008 was a significant economic shock. Among its many consequences, negative long-term labour market effects have been officially recorded in many developed countries, including Italy (e.g. Edely 2009; Zanin and Marra 2012; Arechavala et al 2015; Zanin 2014; Zanin 2016). According to official statistics for the Italian labour market, over three million people were unemployed at the end of 2014 in contrast to the 1.5 million who were unemployed in 2007. During this time, Italy experienced a gross domestic product (GDP) loss of approximately 150 billion euros (at constant 2010 prices). The main aims of the Jobs Act are to (a) increase employment and reduce the share of the workforce with precarious contracts and to (b) stimulate enterprise productivity by encouraging the employment of a young labour
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