The Beveridge Curve: an Analysis for the Italian Labor Market

Details

Supervisors

Van Der Linden, Bruno

Faculty

Faculté des sciences économiques, sociales, politiques et de communication

Degree label

Master [120] en sciences économiques, orientation générale, à finalité approfondie

Abstract

Descriptive evidence of the unemployment-vacancy relationship for Italy over the period 2004-2019 reveals that the Italian Beveridge Curve has undergone a considerable outward shift as of 2011, essentially driven by the sizeable rise in unemployment and the slight reduction in the rate of job openings for years 2011-2013. Among the potential factors behind the shift, shocks to workers' transitions across the states of employment, unemployment and inactivity are considered as the contributing factors because of the significant fluctuations they have experienced between 2011-2013. A stylized matching model for the Italian economy is developed. The theoretical framework models a three-state labor market, allowing for the participation margin along with the employment and unemployment ones. The coexistence of fixed-term and open-ended jobs and institutional features, such as firing costs in the case of employee's lay-off and exogenous wage rigidity, are also included. By shocking the parameters of workers' flows across labor market states, the calibrated version of the model accounts for almost all the increase in unemployment and for part of the observed outward shift of the Italian Beveridge Curve.