The Italian Labour Market and the Crisis

Abstract

The Italian labour market is characterized by deep gender differences and regional variability. The data show that the crisis lead to an increase in the gap of female employment rates and women's inactivity rates with respect to Europe. The North of Italy experienced a higher increase in unemployment than the South, where many people withdrew from the labour market because of poor employment prospects. Moreover, in Italy, the increase in unemployment has been mitigated by the increase in the number of workers having access to the wage supplementation fund who are not computed within the unemployed. Using a micro simulation technique, we estimate the effect of the crisis on income distribution and poverty and find that at the national level, the population showed a reduction in equivalized household income by about 1 percent. The use of wage supplementation fund, together with a higher involvement of youth living in their birth family, brought about the observed limited increase in the poverty rates. The heterogeneity in the system of unemployment benefits increased inequalities amongst the unemployed. This calls for a reform of the system of unemployment benefit and safety net in Italy that has been long postponed.