How “informal recruitment networks” have ruined the Italian job market

March 19, 2017
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Italy invests little in academic education and has a low rate of university graduates compared to the average of industrialized nations. Yet, nearly a fifth of Italians with university degrees are overqualified for the jobs they perform. Adding to this paradox is a marked imbalance between the North and South in terms of employment (with the South reporting higher rates of unemployment) and in quality of jobs offered. Furthermore, entrance to the job market in Italy, in more than 30% of cases, occurs through “informal networks”, or personal contacts including family and friends.

In a study entitled Informal networks, spatial mobility and overeducation in the Italian job market, Valentina Meliciani and Roberta Radicchia demonstrate that these data are interconnected. In fact, hiring through “informal networks” can cause disequilibrium between the level of education and the professional role, pushing workers into careers in sectors, professions or companies where their potential is not fully taken advantage of. Furthermore, mobility is inevitably reduced as the social relationships lying beneath these “informal networks” are generally concentrated in the same geographic areas.

At first sight, it would seem that this mechanism could be obstructed by favoring interregional mobility for workers, putting them in the conditions to find a job in line with their abilities. In reality, the data analyzed by Meliciani and Radicchia indicate that this does not always happen. More specifically, mobility from South to North does not have a significant impact on the imbalance between level of education and professional conditions as this type of mobility has characteristics similar to international migration that responds to the simple need to find a job – more specifically a paycheck – and not to the pursuit of a career that corresponds to qualifications and personal interests. Mobility, however, occurring within the North (From Northwest to Northeast and vice-versa for example) has proven to me more effective the pursuit of appropriate employment.

A more efficient recruiting system to resolve disparity between level of education and professional roles requires cooperation of schools, universities, professional relationships, newspapers and other information systems, public competitions and individual initiative. It has been made evident that reform is necessary, including measures to promote these channels (in addition to policies that favor productive models and activities more in line with the abilities and type of education of the country), in order to reduce unemployment, create incentive to invest in human capital, introduce improved skills into the workforce and increase both worker satisfaction and productivity.

"Informal networks, spatial mobility and overeducation in the Italian job market"