Productivity and employment dynamics: new evidence from Italian regions

Abstract

When productivity growth accelerates job destruction and job creation occur simultaneously. However, what effect this has on the whole economy depends on whether job creation or destruction dominates. We investigate what occurred in Italy from 1977–2003, a time when some labour market reforms were introduced, creating increased flexibility. We also investigate if there were any systematic regional differences in the employment or productivity dynamics and whether these dynamics experienced any sort of spatial externalities. The findings indicate that overall, the effect of job destruction prevailed and that the labour market reforms had a negative impact on employment.

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Notes

  1. 1.

    See the help area of Stata version 12.

  2. 2.

    See also the Stata command xtunitroot.

  3. 3.

    Wooldridge test for autocorrelation in panel data.

    H0: no first-order autocorrelation

    F(1, 19) = 225.022

    Prob > F = 0.0000.

  4. 4.

    Excluding Greece and Spain.

  5. 5.

    Unfortunately, we cannot investigate the relevance of those breaks by means of a panel cointegration on the TFP–employment relationship because it requires that the two variables to be integrated be of the same order, which is not possible here.

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Correspondence to Maria Gabriela Ladu.

Appendix

Appendix

See Tables 6, 7, 8.

Table 6 Data sources and definitions
Table 7 Unit root tests
Table 8 Pedroni and panel cointegration test (VA, K, L)

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Biagi, B., Ladu, M.G. Productivity and employment dynamics: new evidence from Italian regions. Econ Polit 35, 313–336 (2018). https://doi.org/10.1007/s40888-018-0103-9

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Keywords

  • Total factor productivity
  • Job creation
  • Job destruction
  • Labor market reforms
  • Spatial externalities

JEL Classification

  • J01
  • J20
  • O30
  • R11
  • R23