Labour flexibility, internal migration and productivity in Italian regions

Abstract This paper provides an empirical analysis of the Italian total factor productivity (TFP) growth for the 1995-2012 period that takes into account the factors explaining cross-regional differences in productivity growth. We focus on the changes in the quality of labor caused by the increasing use of temporary workers and on the migration flows of human-capital, which almost unidirectionally moved from the Southern to the Northern-Centre regions. Empirical results provide evidence of a non-linearity (U-shaped) in the relationship between the use of temporary workers and TFP growth, which suggests that TFP growth in some Southern regions benefited from the increase in the share of temporary workers after the early 2000s, while regions in the Centre-North regions experienced an opposite effect, with the share of temporary workers being negatively related to TFP growth. Results also show that migration flows of qualified human capital had a positive impact on TFP growth in the regions of destinations, while the number of emigrants have a positive effect on the TFP growth in the regions of origin.