Long Term Estimates of Regional Income Inequality in Italy: the

Tredicesimo Workshop c.MET05
Ricerca economica e politiche. Studi, analisi e progetti per lo sviluppo economico e sociale.
The roots of a dual
equilibrium: GDP, productivity
and structural change in the
Italian regions in the long-run
(1871-2011)
Emanuele Felice
Università “G. D’Annunzio” Chieti-Pescara
June 15, 2016
Università̀ degli Studi di Napoli "L’Orientale”
EU regions eligible for cohesion funds, 2014-2020
Italy’s regional inequality: Estimates
GDP (1871-2011)
Felice 2005a, Rivista di Storia Economica (1938, 1951)
Felice 2005b, Rivista di Storia Economica (1891, 1911)
Felice 2010, Journal of Modern Italian Studies (1891-1951)
Felice 2011, Economic History Review (1891-1951)
Felice-Vecchi 2015, Journal of Interdisciplinary History (1871, 1931)
Indirect estimates: Geary and Stark methodology
High sectoral detail (100-400 activities)
Direct data
Federico agriculture, Ciccarelli-Fenoaltea for part of industry
Productivity, Employment (1891-1951)
Felice 2010, Journal of Modern Italian Studies (1891-1951)
Felice 2011, Economic History Review
European Project (Rosés, Wolf)
From historical to present borders: Felice 2015, in J. R. Rosés and N. Wolf
(eds.), «The Economic Development of Europe’s Regions. A Quantitative
History Since 1900», Routledge (book chapter)
The changes in Italy’s regions
(1871-today)
Table 1. The relative per capita GDP of
the Italian regions (Italy =1)
1871
1881
1891
1901
1911
1921
1931
1938
1951
1961
1971
1981
1991
2001
Piedmont
1.07
1.08
1.07
1.19
1.16
1.28
1.23
1.38
1.51
1.31
1.24
1.19
1.14
1.15
Aosta Valley
0.80
0.99
1.06
1.19
1.29
1.43
1.43
1.44
1.58
1.68
1.44
1.40
1.42
1.24
Liguria
1.38
1.42
1.39
1.48
1.57
1.42
1.64
1.67
1.62
1.25
1.04
1.01
1.06
1.09
Lombardy
1.14
1.15
1.14
1.23
1.18
1.24
1.23
1.38
1.53
1.45
1.36
1.30
1.32
1.30
Trentino-Alto A.
0.69
0.73
0.78
0.82
0.78
0.88
0.92
0.94
1.05
1.01
1.07
1.27
1.30
1.30
Veneto
1.06
0.89
0.81
0.84
0.88
0.78
0.73
0.83
0.98
0.97
0.98
1.09
1.12
1.13
Friuli-Venezia G.
1.25
1.23
1.22
1.25
1.28
1.06
1.17
1.23
1.11
0.91
0.95
0.97
1.04
1.12
Emilia-Romagna
0.96
1.07
1.06
1.02
1.09
1.10
1.09
1.04
1.12
1.17
1.14
1.30
1.22
1.23
Tuscany
1.06
1.08
1.03
0.93
0.98
1.04
1.06
1.01
1.05
1.05
1.08
1.11
1.05
1.09
The Marches
0.83
0.78
0.88
0.83
0.82
0.78
0.71
0.78
0.86
0.87
0.88
1.00
0.95
0.99
Umbria
0.99
1.03
1.06
1.00
0.92
0.93
1.00
0.95
0.90
0.93
0.93
1.01
0.96
0.96
Latium
1.34
1.45
1.37
1.35
1.33
1.36
1.40
1.19
1.07
1.11
1.10
1.06
1.14
1.13
Abruzzi
0.80
0.77
0.68
0.67
0.70
0.72
0.62
0.57
0.58
0.72
0.79
0.85
0.90
0.85
Molise
0.80
0.77
0.67
0.65
0.68
0.72
0.64
0.59
0.57
0.67
0.66
0.76
0.78
0.80
Campania
1.09
1.01
0.99
0.96
0.96
0.88
0.81
0.81
0.69
0.72
0.70
0.65
0.66
0.65
Apulia
0.89
0.95
1.04
0.94
0.87
0.92
0.85
0.72
0.65
0.71
0.71
0.67
0.68
0.67
Basilicata
0.67
0.63
0.75
0.73
0.74
0.75
0.70
0.57
0.46
0.64
0.73
0.69
0.67
0.73
Calabria
0.69
0.66
0.68
0.66
0.71
0.61
0.55
0.49
0.47
0.59
0.66
0.62
0.62
0.64
Sicily
0.95
0.92
0.95
0.89
0.87
0.72
0.82
0.72
0.58
0.61
0.69
0.72
0.72
0.66
Sardinia
0.77
0.81
0.97
0.91
0.93
0.91
0.85
0.82
0.63
0.75
0.85
0.75
0.77
0.77
The
relative per
capita
GDP of
the Italian
regions,
1871-2001
(Italy = 1)
Table 2. The share of Italian regions in
Italian GDP, 1871-2001 (per cent)
1871
1881
1891
1901
1911
1921
1931
1938
1951
1961
1971
1981
1991
2001
10.8
11.1
10.7
11.6
10.8
11.1
10.4
11.3
11.1
10.4
10.2
9.4
8.6
8.5
4.2
4.3
4.4
4.8
5.3
4.9
5.8
5.9
5.4
4.4
3.6
3.3
3.1
3.0
14.3
14.4
14.5
15.8
15.9
16.6
16.8
19.0
21.1
21.4
21.6
20.4
20.7
20.7
Veneto
8.3
6.9
6.3
6.4
7.2
6.7
6.1
6.9
8.0
7.4
7.5
8.4
8.7
9.1
Emilia-Romagna
7.5
8.2
8.1
7.7
8.4
8.7
8.7
8.1
8.4
8.5
8.2
9.2
8.5
8.7
Tuscany
8.0
8.0
7.7
6.9
7.2
7.5
7.6
7.1
7.1
6.9
7.0
7.1
6.6
6.8
Latium
5.7
6.4
6.4
6.6
6.6
7.1
8.3
7.5
7.7
8.9
9.8
9.5
10.5
10.2
Campania
9.9
9.1
8.7
8.2
8.1
7.4
7.0
7.1
6.3
6.7
6.5
6.3
6.5
6.5
Apulia
4.6
5.2
5.9
5.6
5.3
5.6
5.2
4.5
4.4
4.7
4.6
4.5
4.7
4.6
Calabria
3.0
2.8
2.8
2.7
2.8
2.4
2.3
2.0
2.0
2.3
2.3
2.2
2.2
2.2
Sicily
8.9
9.2
9.8
9.4
8.9
7.7
7.9
6.7
5.4
5.7
5.8
6.2
6.2
5.7
Sardinia
1.8
1.9
2.3
2.2
2.2
2.1
2.0
2.0
1.7
2.1
2.3
2.1
2.2
2.2
North-West
29.6
30.1
29.9
32.5
32.3
33.0
33.4
36.4
37.9
36.5
35.7
33.3
32.7
32.5
North-East &
Centre
37.4
37.2
36.5
35.5
36.9
38.3
39.1
38.4
39.6
39.2
40.0
42.4
42.3
43.3
South and islands
33.0
32.7
33.6
31.9
30.9
28.7
27.5
25.1
22.4
24.4
24.3
24.2
25.0
24.2
Centre-North
67.0
67.3
66.4
68.1
69.1
71.3
72.5
74.9
77.6
75.6
75.7
75.8
75.0
75.8
Piedmont
Liguria
Lombardy
The literature on the North-South
divide
1) at the time of Unification (1861) the North-Central regions
were already more advanced
Fortunato… Cafagna, Zamagni
North-West was a natural candidate for industrialization
geographical position, natural endowments, human and social
capital
2) The South was exploited by the North
Nitti, Gramsci… Marxists, Romeo
Blocco agrario-industriale
the North-South divide emerged mostly in the first decades
following Unification
3) Southern Italy a bit more backward, but highly diversified
Imes, Meridiana from the 1980s… new estimates: Federico,
Fenoaltea, Felice
Divergence took place in the interwar years
Dual development
1) Moderate divergence (1871–1911)
2) Great divergence (1911–1951)
3) General convergence (1951–1971)
4) Convergence in the Centre-North, or a tale of two
Italies (1971–2001)
The determinants of GDP per capita
Y/P = Y/L * L/P
Productivity (GDP per worker)
Activity rates (workers per capita)
Beta and sigma convergence in
per capita GDP
standardized beta is -0.497
Beta and sigma convergence in
per worker GDP
standardized beta is -0.893
Beta and sigma convergence in
the activity rates
standardized beta is -0.166
The periodization of regional
inequality in Italy
Moderate divergence (1871–1911)
Great divergence (1911–1951)
General convergence (1951–1971)
Convergence in the Centre-North, or a tale
of two Italies (1971–2011)
The liberal age (1871-1911): beta convergence
in per capita and per worker GDP
standardized beta is -0.183 for per capita GDP, 0.224 for per worker GDP
The interwar years (1911-1951): beta
convergence in per capita and per worker GDP
standardized beta is 0.259 for per capita GDP,
0.072 for per worker GDP.
The golden age (1951-1971): beta convergence
in per capita and per worker GDP
standardized beta is -0.886 for per capita GDP, 0.914 for per worker GDP
A tale of two Italies (1971-2011): beta
convergence in per capita and per worker GDP
standardized beta is -0.048 for per capita GDP, 0.865 for per worker GDP
Explanations: from human to social
capital
Differences in employment rate and between sector productivity
(neoclassical trade theory)
Rather than differences in within-sector productivity (NEG)
as if convergence in factor endowments (via decreasing returns in the production
function) was prevented by conditioning variables
human capital in the first and the second industrial revolution
(1871-1970)
social capital in the post-fordist age
The convergence of the economic miracle was an exception due to
massive State intervention
Other explanations:
Migration…
Migration
Should favour convergence
grande emigrazione in the liberal age
No migration in the interwar years
Interregional migration in the 1950s and 1960
But at that time most of convergence was in industry and industrial
productivity
Other explanations:
… Regional policies
‘Cassa per il Mezzogiorno’, created in 1950
a wide range of infrastructural works – roads, aqueducts and
others
During the 1960s it concentrated on the industrial sector
heavy industries with high capital/labour ratios
This can explain much of the South’s convergence
Yet the Cassa did not create the conditions for autonomous
development
1970s crisis: collapse of the new heavy industries in the South
regional policy redirected towards unproductive expenditures
And it may have even favoured organized crime
Why southern Italy is
backward?
An interpretation
The North-South socio-institutional
divide around Unification
Strong differences in infrastructures and in the pre-condition for
growth
railways, roads, credit system, human capital
Institutions (liberal versus absolutist)
Higher inequality in the South between the Rich and the Poor =
Higher Pauperism
Mild differences in GDP per capita
(but Italy as a whole still was a backward country)
Strong differences in social indicators
Life expectancy, poverty, literacy
Strong differences in social capital
(possibly, as a consequence of higher inequality, poor education,
and the failed State)
After Unification: social and
institutional differences
extractive versus inclusive institutions
and, therefore, in the tuling elites and in the economic policies
Political institutions
Formally the same from Unification (1861) until the 1970s, but
(informally) they worked differently
Because of different ethics/social capital... Because they were
different in the past… Because of a different socio-economic
setting...
Economic institutions
Not even formally the same:
* Organized crime (an illegal, but formal, economic institution);
* Different agrarian regimes
Thank you!
Emanuele Felice
Università “G. D’Annunzio” Chieti-Pescara