Measuring the impact of the 2008 and 2011 financial crises and the 2015 recovery on the unemployment rate in Italy

Abstract

Unemployment rate is one of the most important macroeconomic indicators used by governments for setting economic policy, as it provides worthwhile information on a country's labour market condition, on the health of its economic system and on its future growth. In Italy, since the turn of the century, this indicator steadily decreased until the onset of the 2007–2008 global financial crisis, after which it saw rapid growth that continued in the subsequent years and intensified with the 2011 European sovereign debt crisis. A reversal of this trend occurred only since 2015, after almost eight years of growth, when unemployment rate began a slow decline. Using quarterly data derived from official statistics produced by the Labour Force Survey, this study proposes a counterfactual approach based on interrupted time series analysis to measure the severity of the immediate impact and persistence of the 2008 global financial crisis and the 2011 European sovereign debt crisis on the Italian unemployment rate as well as the intensity of the economic recovery in the years after 2015. Differences across population age sub-groups were considered to highlight the effects on youth unemployment, gender, macro-regions, citizenship and level of education and thus obtain a more in-depth analysis.