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Original Articles

Short, Long and Spatial Dynamics of Informal Employment

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Pages 1804-1818 | Received 06 May 2014, Accepted 25 Jun 2015, Published online: 11 Sep 2015
 

Abstract

Di Caro P. and Nicotra G. Short, long and spatial dynamics of informal employment, Regional Studies. This paper analyses regional shadow labour markets. Cross-regional migration flows are introduced in a stochastic two-sector model used to study the effects of regional interactions on informality. Empirical results show that informal activities across Italian regions are driven by the inefficient provision of public goods and high taxes. Regional connections are found to be significant. Place-specific reactions of informal employment to national shocks in the official economy are investigated, finding that the informal sector can act as a complement to or a substitute for formal activities. The summary of the results and policy conclusions are then discussed.

Di Caro P. and Nicotra G. 非正式就业的短期、长期与空间动态,区域研究。本文分析区域的影子劳动市场。本研究在随机两部门模型中引入跨区域移民潮,该模型用来研究区域互动对非正式性的影响。经验结果显示,意大利各区域的非正式活动,是由不充分的公共财供给与高税率所驱动。本研究亦发现显着的区域连结。本研究探讨非正式就业对正式经济中的全国冲击的特定地方回应,发现非正式部门可以作为正式活动的补充或替代。本文将接着讨论研究结果摘要和政策结论。

Di Caro P. et Nicotra G. La dynamique longue, courte et spatiale du travail informel, Regional Studies. Cet article cherche à analyser les marchés du travail souterrains régionaux. On introduit des flux migratoires interrégionaux dans un modèle stochastique à deux secteurs dont on se sert pour étudier les effets des interactions régionales sur le caractère informel. Les résultats empiriques montrent que les activités informelles à travers les régions italiennes sont pilotées par l'offre inefficace des biens publics et par des impôts élevés. Les connexions régionales s'avèrent importantes. On examine les réactions du travail informel aux chocs nationaux pour l’économie officielle selon le milieu, et il s'avère que le secteur informel peut compléter ou substituer les activités formelles. Il s'ensuit une discussion du résumé des résultats et des conclusions pour la politique.

Di Caro P. und Nicotra G. Kurze, lange und räumliche Dynamik der informellen Beschäftigung, Regional Studies. In diesem Beitrag analysieren wir regionale Schattenarbeitsmärkte. Wir führen überregionale Migrationsströme in ein stochastisches Zweisektorenmodell ein, das zur Untersuchung der Auswirkungen der regionalen Wechselwirkungen auf die Informalität genutzt wird. Aus den empirischen Ergebnissen geht hervor, dass informelle Tätigkeiten in italienischen Regionen durch die ineffiziente Bereitstellung öffentlicher Güter sowie durch hohe Steuern bedingt sind. Regionale Verbindungen werden als signifikant befunden. Wir untersuchen ortsspezifische Reaktionen der informellen Beschäftigung auf nationale Schocks in der offiziellen Wirtschaft und stellen fest, dass der informelle Sektor formelle Tätigkeiten ergänzen oder ersetzen kann. Anschließend erörtern wir die zusammengefassten Ergebnisse und politischen Schlussfolgerungen.

Di Caro P. y Nicotra G. Dinámicas cortas, largas y espaciales del empleo informal, Regional Studies. En este artículo analizamos los mercados laborales sumergidos de ámbito regional. Los flujos de migración transregionales se introducen en un modelo bisectorial estocástico utilizado para estudiar los efectos de las interacciones regionales sobre la informalidad. Los resultados empíricos indican que las actividades informales en las regiones italianas están condicionadas por la prestación ineficaz de bienes públicos y por los altos impuestos. Observamos que las conexiones regionales son significativas. Analizamos las reacciones en lugares específicos de empleo informal a los choques nacionales en la economía oficial y observamos que el sector informal puede complementar o sustituir las actividades formales. Luego analizamos el resumen de resultados y conclusiones políticas.

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Acknowledgements

The authors thank the editors and two anonymous referees for providing very helpful suggestions. They are grateful to Tito Boeri, Emanuele Bracco, Peter Burridge, Salvatore Capasso, Roberto Cellini, Alex Cooper, Tiziana Cuccia, Edoardo Di Porto, Miguel Gòmez de Antonio, Luigi Guiso, Akihiko Kaneko, Isidoro Mazza, Belmiro Jorge Oliveira, Massimiliano Piacenza, Alessandro Santoro and Gilberto Turati; and the participants at: the VIth JAIT International Workshop (Catania, Italy), the VIIIth World Conference of the Spatial Econometrics Association (ETH Zurich, Switzerland), and the XXVIth Conference of the Italian Association of Public Economics (Pavia, Italy). The usual disclaimer applies.

Disclosure statement

No potential conflict of interest was reported by the authors.

Supplemental data

Supplemental data for this article can be accessed at http://10.1080/00343404.2015.1072274

Notes

1. The production function can be extended by introducing the costs of concealment that are sustained to reduce the probability of being caught; this will reduce the skill threshold.

2. A different migration pattern may also occur when formal workers in region decide to move to region to become informal; in this case, the threshold is:

However, this different migration flow is less likely to occur given that people can reduce their welfare rather than increase it after migrating in search of informality due, for instance, to the reduced firm size.

3. The four macro-areas are defined by ISTAT as follows: (1) North-West: Valle d'Aosta, Piemonte, Lombardia, Liguria; (2) North-East: Trentino-Alto Adige, Friuli-Venezia Giulia, Veneto, Emilia Romagna; (3) Centre: Toscana, Marche, Umbria, Lazio; and (4) South: Abruzzo, Molise, Campania, Puglia, Basilicata, Calabria, Sardegna, Sicilia.

4. The robustness of the empirical strategy was checked by performing first-stage diagnostics and instrumental variables (IV) estimates. All test results discussed and additional estimates are available from the authors upon request.

5. Estimation results obtained without regional fixed effects and by applying simple ordinary least squares (OLS) standard errors are available from the authors upon request.

6. Different threshold levels for this index were used, obtaining similar results. The SHIW index can be broken down by sector, gender and level of education providing further insights into the overall shadow labour market in Italy. The task of exploiting these additional features is left for future research.

7. Detailed statistics about the SHIW indicator are available from the authors upon request.

8. The authors wish to thank Salvatore Capasso and Luigi Guiso for sharing their dataset on the Italian regional supply of credit in 1936.

9. The traditional VAR modelling procedure was adopted by preliminary testing for the optimal lag length of the system and for the presence of co-integration.

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