Geographic labour mobility and the cost of housing: evidence from Italy

Abstract

In recent years, internal migration in Italy has declined markedly, notwithstanding the widening of the North-South gap in terms of unemployment rates and real income. Here, the extent to which the housing market has contributed to the decline is examined. Preliminary to this analysis, differentials in the cost of housing between the macro-areas of the country are estimated using data on the market price of houses located in 96 provincial capitals. Econometric evidence is provided supporting the view that the North-South housing price differential is a notable factor in explaining the falling pattern of mobility. The positive impact on migration from the South to the North of a wider gap in the two areas in terms of income and employment prospects has been offset by the housing price differential, which has steadily risen at least from the mid-1980s onwards. Yet, a considerable share of the decrease in mobility remains unexplained, possibly owing to the heterogeneity in the composition of migration flows across different cohorts.