Abstract

One of the most widely cited labour market indicators, the unemployment rate, is based on a conventional definition of unemployment. In Italy, following the ILO recommendations, the "unemployed" category comprises all persons who state to look for a job, to be immediately available for work and to have undertaken specific search steps within the month before the interview. Because of this last requirement, about one third of Italian job seekers are not classified as unemployed; these individuals are generally named "potential labour force". A test on the transition probabilities estimated using the Italian Labour Force Survey suggests that in the Southern part of Italy the unemployed and the potential labour force categories are not behaviourally distinct labour market groups. The standardised ILO definition of unemployment is then too rigid for a relevant part of the Italian labour market.