Informal networks, spatial mobility and overeducation in the Italian labour market

Abstract

This paper investigates the impact of the use of the informal recruitment channel (relatives and friends) on the probability of being overeducated in the Italian labour market, taking into account its impact on spatial flexibility. We argue that the informal recruitment channel may increase job–education mismatches both directly (by inducing some workers to undertake careers in industries, professions, or firms where their comparative productive advantage is not fully exploited) and indirectly by negatively affecting spatial flexibility. In order to test these hypotheses, we estimate probit models with self-selection using ISFOL Plus survey data providing information on labour market entry channels, job-related migration and a “subjective” measure of overeducation. We find a robust positive impact of the use of the informal channel on overeducation and a robust negative effect of the use of this channel on migration. On the other hand, we find that migration reduces overeducation only in some geographical areas of the Italian territory. Overall, these findings suggest that a reform of employment services in Italy is needed in order to favour spatial flexibility, reduce the use of the informal channel and enhance the quality of job–education matches.

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Fig. 1

Notes

  1. 1.

    In 2014, according to Eurostat data, the lowest proportion of higher education graduates in Europe was found in Italy (21.7 %), followed by Romania (21.8 %) and Malta (22.4 %).

  2. 2.

    In 2014, the percentage of workers finding a job through the informal channel was over 30 %.

  3. 3.

    Devillanova (2013) discerns that the two research areas have developed independently, ignoring each other.

  4. 4.

    Overeducated individuals are identified with a statistical measurement method.

  5. 5.

    Even if short-distance migration seems to increase the probability of being overeducated.

  6. 6.

    Also Devillanova uses data from the 2005 Isfol Plus cross section.

  7. 7.

    Iammarino and Marinelli use the date of the ‘Indagine sull’inserimento professionale dei Laureati (ISTAT 2010) and an indicator of educational (mis)matching which takes simultaneously into account (a) the formal educational requirements of the employer, and (b) the graduates’ self-assessment with respect to the competences and skills require to perform their job.

  8. 8.

    We thank an anonymous referee for pointing out clearly the existence of the two counteracting mechanisms.

  9. 9.

    Plus (Participation Labour Unemployment Survey) is a sample survey on the Italian labour market supply (see Mandrone and Radicchia 2012). The survey annually samples, on average, 40,000 individuals, contacted through a dynamic CATI system without proxy interviews. Since the second wave of the survey (2006), it is characterised by an extensive number of panel observations (about 65 %). The survey sample design is stratified over the Italian population aged 18–64. Strata are defined by regions, type of city (metropolitan/not metropolitan), age (5 classes), sex, and employment status (employed, unemployed, student, job retired, other inactive/housewife). The distribution of the sample is obtained through a multi-domain allocation procedure, developed specifically for the project Plus (see Giammatteo 2009). The extraction of the sample provides a process for quota. The reference population is derived from the annual averages of the Istat Labour Force Survey. The seventh edition of this annual survey came out in the first half of 2016. The Isfol Plus data are available online by accessing the open-data section  http://www.isfol.it/open-data-delle-ricerche/isfol-microdati.

  10. 10.

    The regression introduces many control variables (for example occupational characteristics) that reduce the sample to 43,674 employees in the richer specification. The observations dropped are random and do not introduce any bias. In fact, we have checked that the means of the most relevant variables do not change substantially in the two samples. Results are available on request.

  11. 11.

    In the Plus survey 2014, the informal channel involves the 30 % of the employees with a level of education higher than the compulsory school, but it makes a distinction between people who find job through family and friends referrals (about 25 %) and workers who find job via professional ties (about 7 %).

  12. 12.

    High professional qualification includes: 1 Managers, 2 Professionals, 3 Technicians and associate professionals. Medium professional qualification includes: 4 Clerical support workers, 5 Service and sales workers. Low professional qualification includes: 6 Skilled agricultural, forestry and fishery workers, 7 Craft and related trades workers, 8 Plant and machine operators, and assemblers 9 Elementary occupations.

  13. 13.

    Although individuals entering the labour market through the informal channel are more overeducated also because they do not migrate, we also think that this is not the only reason for the use of the channel to affect overeducation. In order to test whether this is the case, we have estimated the relationship between overeducation and the use of the informal channel separately on individuals who migrate and on individuals who do not migrate. We have found that for both samples of individuals the use of the informal channel significantly increases the risk of overeducation. A second issue is that the negative impact of the use of the informal channel on overeducation might depend on the strictly formal procedures of recruitment that may be typical of some qualified public sector occupations. In order to test whether this effect drives the results, we have estimated the regression only for the private sector and we have found that the negative association between informal ties and overeducation still holds. Results are available on request.

  14. 14.

    We have also tested whether the use of the informal recruitment channel reduces migration distinguishing between the different geographical areas, and we have found that this is the case. Results are available on request.

  15. 15.

    Another difference is that our sample includes also people with secondary education while they focus on graduates. However, our results are robust to restricting the sample to graduates.

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Meliciani, V., Radicchia, D. Informal networks, spatial mobility and overeducation in the Italian labour market. Ann Reg Sci 56, 513–535 (2016). https://doi.org/10.1007/s00168-016-0752-y

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JEL Classification

  • R23
  • J24
  • J61