The Crisis and Employment in Italy

24 Pages Posted: 8 Dec 2010

Date Written: June 8, 2010

Abstract

The fall in employment and the increase in unemployment rates in Italy in 2009 were fairly modest, given the sharp drop in GDP and compared with the recession of the early 1990s. This work shows that these data should be interpreted with caution, however. Firstly, employment trends as measured by Italian labour force survey may understate the decline in total employment if, as seems plausible, a lag exists between the entry of immigrants into the country and their registration. Secondly, the rise in the unemployment rate has been curbed by extensive recourse to temporary income support schemes to reduce working hours (such as the Cassa integrazione guadagni or Wage Supplementation Fund) in the northern regions, and by the sharp drop in participation in the South (the discouragement effect). The results of the Bank of Italy’s Survey of Industrial and Service Firms conducted in September 2009 show that the largest employment cuts occurred in the firms most exposed to international markets. Based on estimated labour input elasticity and on the available GDP forecast for 2010-11, we calculate that Italian employment is likely to remain well below its pre-crisis level in the coming quarters.

Note: Downloadable document is in Italian.

Keywords: crisis, employment,unemployment

JEL Classification: E24, J20, J60

Suggested Citation

Cingano, Federico and Torrini, Roberto and Viviano, Eliana, The Crisis and Employment in Italy (June 8, 2010). Bank of Italy Occasional Paper No. 68, Available at SSRN: https://ssrn.com/abstract=1721428 or http://dx.doi.org/10.2139/ssrn.1721428

Federico Cingano (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Roberto Torrini

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Eliana Viviano

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

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