By focusing on the Italian experience, we ask whether the relationship between labor taxes and unemployment varies across regions. In spite of similar national labor market institutions, we show that this relationship is significantly stronger in the highly industrialized North than in the...

One of the key issues in economics is the explanation of unemployment. Doing so "modern mainstream macroeconomics" frequently refers to institutional structures in the individual countries (e.g. Layard, Nickell & Jackman 1991, 2006; Carlin & Soskice 2006). However, unemployment within states varies...