Do job vacancies variations anticipate employment variations by sector? Some preliminary evidence from Italy

Government policy has placed increasing emphasis on the need for robust labour market projections. The job vacancy rate is a key indicator of the state of the economy underpinning most monetary policy decisions. However, its variation over time is rarely studied in relation to employment variations, especially at the sectoral level. The present paper assesses whether changes in the number of vacancies from quarter to quarter are a leading anticipator of employment variation in certain economic sectors over the previous decade in Italy, using multivariate time-series tools (the vector autoregressive and error correction models) with Eurostat data. As robustness checks for integration order and cointegration, we compare traditional critical values with those provided by response surface models. To the best of our knowledge, no previous study has evaluated this relationship using Italian data over the last decade. The results demonstrate that percentage changes in numbers employed (occupied persons) react to percentage changes in vacancies (one-quarter lagged), but not vice versa, indicating that variations of vacancies are weakly exogenous. The fastest short-term adjustment from disequilibrium is seen in the construction industry, whereas the manufacturing and the information and communication technology sectors demonstrate the strongest long-run relationships among variations. This suggests that the matching rates – the likelihood that a vacancy is filled – are higher for these than for other sectors, as a result of developments in recruitment technology for professional figures of such industries.