Recession Matters? Local Labour Markets and Regional Unemployment Divides in Italy, 2004-2013

Economic cycles in wealthier countries have resulted in a progressive transformation ofregional spatial structures, possibly strengthening socioeconomic disparities andpolarization in the production base. Local job markets are particularly sensitive to changesin economic functions, increased regional divides and stagnant product dynamics. The regional spatial structure of unemployment was hypothesized to be strongly affected by economic cycles. To verify this hypothesis, the present work investigates spatial structure and short-term changes of activity and unemployment rate in 686 local labour markets during three phases of the recent economic cycle in Italy: (i) employment growth corresponding to moderate economic expansion (2004-2007); (ii) early crisis' stage with moderate increase of unemployment (2007-2010); and (iii) late crisis' stage with marked increase of unemployment (2010-2013). The empirical analysis identified the socioeconomic factors better characterizing labour market dynamics. Results pointed out that the 2007 recession has corresponded to decreased spatial polarizations in unemployment rate, reflecting an attenuation of the traditional gap between affluent northern regions and disadvantaged southern areas.