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.