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.

Long and Short Distance Migration in Italy: The Role of Economic, Social and Environmental Characteristics

“…The reasons for this slow down in migration between the mid-1970s and mid-1990s are still not entirely clear and various explanations have been put forward, including the role of public sector investment in southern regions (Attanasio & Padoa-Schioppa, 1991), increasing northÁsouth house price differentials (Cannari et al, 2000), the growth in the absolute living standards in the south (Faini & Venturini, 1994), inefficiencies in interregional job matching processes (Casavola & Sestito, 1993;Faini et al, 1997), and changes in industrial structures and systems (Murat & Paba, 2001). …”

“…Such a detailed analysis has not been done before for the Italian case. Most migration research in Italy has examined interregional flows among larger areas, either regions or groups of regions, and has not examined the differences in the determinants of movements of different lengths (Attanasio & Padoa-Schioppa, 1991;Faini et al, 1997;Daveri & Faini, 1999;Cannari et al, 2000;Furceri, 2006;Basile & Causi, 2007;Etzo, 2008).…”

Housing, Finance, Policy and the Wider Economy

“…Winkler (2016a) reviews the literature on housing supply. The nature of housing supply is found to help explain house price developments (e.g., Glaeser et al, 2008;Gyourko, 2009;Grimes & Aitken, 2010), housing affordability (e.g., Glaeser & Gyourko, 2002;Meen, 2011), cross-location income inequality (e.g., Glaeser et al, 2006;Saks, 2008), labor economics (e.g., Cannari et al, 2000;Andrews & Caldera Sanchez, 2011) and housing-related policy reform success (e.g., Swank et al, 2002;Hilber & Turner, 2014). Housing supply reform has great potential to enable the housing market to work better (Worldbank, 1993).…”

“…Housing tenure, neighborhood stability and labor market outcomes are interrelated (e.g., Cannari et al, 2000;ECB, 2003;OECD, 2011). Andrews et al (2011 stress that unsubsidized tenants tend to be, on average, 13 percent (nine percent) more likely to relocate than owner occupiers without (with) credit.…”

“…Housing market outcomes in terms of quality, quantity and price also tend to have an impact on neighborhood social diversity and social inclusion, which can in turn influence economic performance (e.g., Galster, 2007;Andrews et al, 2011). Moreover, relative housing market conditions can have implications for migration and labor economics (e.g., Cameron & Muellbauer, 1998;Cannari et al, 2000;Saks, 2008). In addition, housing underinvestment is associated with a shortage of affordable formal housing, increased commuting as well as depressed residential and labor mobility (Worldbank, 1993).…”