Riccardo Crescenzi, Davide Dottori(p), Davide Rigo

Mauro Lanati

We study the causal impact of increased diffusion of work from home (WFH) after the Covid-19 pandemic on labour market participation and employment at the local labour market (LLM) level. Leveraging a unique administrative dataset on the actual use of remote working in Italy, we build a local measure of the increased diffusion of WFH. We tackle endogeneity issues by an instrumental variable approach, whereby the actual increase in WFH is instrumented by its predetermined potential resulting form the LLM's sectoral composition. We control for a number of factor at the LLM that could affect the distribution of the WFH potential and labour market trends, showing that no evidence pre-trend emerges once these factors are accounted for. We find that increased use of WFH has brought about a positive effect on both activity rates and employments rates. We show that the results are robust to alternative instruments and other sensitivity checks. We also detect that the impact is higher in response to WFH among women in child-rearing age and in areas where childcare services are less present. Moroever, we find the effect is stronger in Southern areas and in less densely populated LLMs. These findings suggest that WFH can play a role in terms of labour market inclusion.

Mauro Lanati (p), Giorgia Giovannetti, Lisa Grazzini, Annalisa Luporini, Michel Rizzo

Francesco Frangiamore

This article examines how EU structural and investment funds affect local labour demand. Using Lightcast granular data on online-job postings in Italy, we match quarterly information on EU project disbursements with variations in labour demand at NUTS-3 provincial level. By relying on a shift-share type of instrument, we find that EU funds have a positive effect on the number of postings; the resulting impact is particularly strong on jobs that require green and digital skills and is mostly driven by the extensive margin (number) of project disbursements. Moreover, the results suggest that the effect on labour demand is particularly strong around the middle-low segment of the geographical distribution of socio-economic conditions, while it is not significant in richest and poorest areas. By relying on a gravity model of internal migration we also leverage the allocation of EU funds to investigate potential adjustment mechanisms to labour demand shocks. Our results indicate that the adjustment process operates only through net in-migration of workers from other provinces, while it leaves the number of local firms unaffected.

Francesco Frangiamore (p)

Luis Galvis

This paper studies the dynamic effects of financial fragility shocks on unemployment at the regional level for Italy, and analyses the correlation between some regional characteristics and the regional responses to such shocks. I construct a new quarterly dataset for the 20 Italian regions, ranging from 1997-Q1 to 2023-Q3, including the bad loans rates, unemployment rates and bank interest rates. The results show that sudden increases in financial fragility have important negative dynamic effects on regional employment, and the least developed regions are the hardest hit. Moreover, the regional heterogeneous effects on unemployment are positively associated with regional credit risk, unemployment rate levels and the regional share of temporary workers, and negatively correlated with regional economic and financial development levels, regional competitiveness, labour market efficiency and education levels.

Luis Galvis (p)

Davide Dottori

This paper examines urban labor informality in Colombia, highlighting its relationship with educational attainment, gender inequalities, and regional disparities. Using data from the Gran Encuesta Integrada de Hogares (GEIH) for the 23 main metropolitan areas between 2010 and 2023, the probabilities of informality are estimated through a probit model with an endogenous variable, which addresses the relationship between education and labor informality by using an instrumental variable approach.
The importance of this study lies in the need to understand the relationship between labor informality, education, gender inequalities, and regional disparities in Colombia. Informality is a phenomenon that impacts fiscal stability, limits social safety nets, and perpetuates poverty and income inequality, representing one of the main structural challenges for developing economies. Moreover, gender inequalities and regional disparities add complexity to the phenomenon, as they reflect persistent barriers to accessing formal employment. Understanding the causes and characteristics of informality is essential for designing public policies that promote labor inclusion and equity in a country where these issues have shown high persistence over time. Since education is closely related to other determinants of informal employment, this study models its behavior to assess its impact on informality rates, recognizing that an improvement in educational attainment could positively influence productivity and job formalization.

The results show that each additional year of education is associated with a reduction of more than two percentage points in the probability of being informal. Urban labor informality is more pronounced in less prosperous metropolitan areas, which are generally located on the periphery of the country. The incidence of this labor market indicator has shown progress in terms of reduction in much of the country; however, we still record levels above those of several Latin American economies. This phenomenon is more frequently observed among women, young people, older adults, and individuals with lower educational attainment, as well as in small businesses and less prosperous regions. These population groups and entities tend to be linked to sectors that, on average, exhibit lower levels of productivity.
Despite improvements in formalization observed in recent years, gender and regional disparities persist, underscoring structural inequality in access to formal employment. These findings underline the importance of implementing public policies that promote employment formalization, reduce gender inequalities, and address regional disparities, fostering labor inclusion in the most affected areas of the country.