Proximity, Polarization, and Local Labor Market Performances

Abstract

Recently, a new methodological approach to empirics of economic dynamics based on nonparametric analysis has been proposed. The approach contemplates the presence of mechanisms of polarization and spatial linkage affecting the spatial characteristics of growth that are ruled out by the basic neoclassical approach while being the starting point of core-periphery models. A nonparametric investigation on the geographical distribution of local labor markets performances in Italy is presented, summarized by the employment rate. The analysis provides empirical support to the prediction that the behavior of the entire cross-section distribution of Italian employment rate can be mainly explained by proximity, and therefore by spatial spillover. The analysis is carried out on a very disaggregated territorial level: the area units considered are the 784 Local Labour Systems (LLSs), defined as “travel-to-works” areas by the National Statistical Institute (Istat). The basic idea is that distribution dynamics changes whenever conditioned with respect to spatial closeness of LLSs. I investigated the distribution dynamics of employment rate in LLSs over the 1971 to 1996 period by using transition matrices and the stochastic kernel approach. The results show that the employment rate distribution across LLSs has a strong polarization, but it vanishes if it is conditioned to the closer neighbors' employment rate. The analysis suggests that the local labor market performances inside Italy do not present strong territorial discontinuities. This is related to the geographical position of the country with respect to the relevant markets, and it is consistent with the predictions of the core-periphery model.