Evaluating the Dynamic Effects of Active Labour Policies in Italy

Abstract

This paper analyses whether active labour market policies (ALMPs) have differing effects on unemployment and employment dynamics according to the particular region in which they are implemented. To this end, it analyses alternative theoretical and econometric models thought to capture the possible effects of active labour market policies on labour force dynamics. The econometric methodologies implemented are the generalized method of moment (GMM) and the panel vector autoregression (P-VAR). The evidence yielded by the GMM models suggests that the effects of different ALMPs on unemployment are dissimilar across the Italian regions. It follows that some active programmes are likely to have a greater effect in the South than in the North. The results of the P-VAR models estimated are synthesized by impulse response analysis and forecast error variance decomposition. The impulse response analysis suggests that an increase in total ALMP gives rise to: (i) a decrease in the unemployment rate; and (ii) a significant increase in labour force participation. More interestingly, the results obtained from the error variance decomposition analysis show that unemployment movements are not driven by shocks in the ALMPs and that, especially in the northern regions, atypical contracts shocks account for a substantial portion of unemployment dynamics. Copyright 2006 The Authors; Journal compilation 2006 CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd..

Dynamic Relationship between Corruption and Youth Unemployment: Empirical Evidences from a System GMM Approach

“…Similar to Altavilla and Caroleo (2006), we extend our empirical analysis of the dynamic relationship between corruption and youth unemployment by using the PVAR applied to a six variable system to examine the impact of various shocks on youth unemployment. The results from the impulse response functions in figure 3 suggests that the shock to the corruption practices (i.e.…”

Unemployment by gender and gender catching‐up: Empirical evidence from the Italian regions

“…2009). With regard to the Italian context, Destefanis and Fonseca (2007) evaluate the cross‐region diversified effects of the Treu Law on the relationship between unemployment and vacancies; Altavilla and Caroleo (2006, 2009) provide an empirical assessment of the impact of active labour market policies on a regional basis; and Ichino et al. (2005) explore the role of TWAs.…”

Evaluating the effects of investment in information and communication technology

“…The PVAR models have become increasingly popular in macroeconomics to analyse the effects of fiscal policy on investment across OECD countries (Alesina et al 2002), the turning point prediction across economies (Canova and Ciccarelli 2004), the effects of labour policy across regions (Altavilla and Caroleo 2006), the propagation effects of fiscal policy in the EU (Beetsma, Giuliodori, and Klaassen 2006), and the financial development across countries (Zicchino and Love 2006), among other issues. This paper uses the PVAR models to analyse the effects of ICT investment on the output, employment, and labour productivity in each country considered at the industrial level.…”