The Effects of the Financial Crisis on the Italian and US Labour Markets

Abstract

The current financial crisis is the most severe since the Great Depression. Although it began in the United States, it has significantly disrupted labour markets across the globe. Given the severity of the crisis it is important to analyze both the short-term cyclical effects on families and individuals and the long-term effects on investment and economic growth. In particular, in this chapter we will analyze the short-term socio-economic effects of high unemployment, while at the same time delineating potential factors affecting long-term growth. We compare the labour markets of the United States and Italy. These two countries had very different labour market experiences before the crisis, and if we are to provide appropriate solutions to the crisis we need a global perspective and global comparison. The first section of the chapter will discuss and compare the two labour markets; the second section will discuss the effects of the crisis on them; the third section contains an estimation of the costs of unemployment in terms of poverty (both subjective and in terms of money income) and in terms of access (with regards to Italy) to health services; the last section will offer concluding observations and policy suggestions.