Does Labour Market Area Affect Local Unemployment Rates? Evidence from Mono-centric and Polycentric Italies, 2006-2022

We reconnect the economic and geographical dimensions of labour market dynamics by examining whether settlement models affect local labour markets’ performances in Italy. Results of spatial Durbin regressions outline a quadratic relationship between unemployment and market area, with lower rates in bigger and smaller districts. Tourism and ‘Made-in-Italy’ industries had a positive impact on local unemployment. Conversely, urban districts or those located in EU-Objective-2 regions exhibited higher unemployment rates. Local regressions demonstrate how diversified market areas consolidate spatial disparities in unemployment rates in mono-centric regions like Southern Italy. Economic downturns suggest the importance of polycentric development to achieve balanced job markets.