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TFP Differentials across Italian Macro-Regions: An Analysis of Manufacturing Corporations between 1995 and 2015

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  • Andrea Locatelli
  • Emanuele Ciani
  • Marcello Pagnini

Abstract

In this work we study the geographical differences in total factor productivity (TFP) estimated at firm level for corporations active in the manufacturing sector between 1995 and 2015. In 2015 the average TFP in the South was between 13 and 33% lower than in the North-West: the largest estimate is obtained using the number of employees as a proxy for labour input; the smallest, by using the cost of labour which better captures the skill composition and the actual work intensity. Productivity levels in the North-East were close to those in the other Northern regions, while firms in the Centre were in-between. During the two decades the TFP gap between more and less productive firms contracted in all areas, but more so in the South. This led to a reduction in the North-South TFP divide, which was also driven by a more intense selection process in the Southern regions during the economic recession.

Suggested Citation

  • Andrea Locatelli & Emanuele Ciani & Marcello Pagnini, 2019. "TFP Differentials across Italian Macro-Regions: An Analysis of Manufacturing Corporations between 1995 and 2015," Politica economica, Società editrice il Mulino, issue 2, pages 209-242.
    • Handle: RePEc:mul:je8794:doi:10.1429/94537:y:2019:i:2:p:209-242
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    Cited by:

    1. Luigi Buzzacchi & Antonio De Marco & Marcello Pagnini, 2024. "Agglomeration and the Italian North–South divide," Journal of Economic Geography, Oxford University Press, vol. 24(5), pages 707-728.
    2. Giuseppe Albanese & Guido de Blasio & Andrea Locatelli, 2021. "Does EU regional policy promote local TFP growth? Evidence from the Italian Mezzogiorno," Papers in Regional Science, Wiley Blackwell, vol. 100(2), pages 327-348, April.
    3. Giuseppe Albanese & Guido de Blasio & Andrea Locatelli, 2019. "Place-based Policy and Local TFP," Temi di discussione (Economic working papers) 1253, Bank of Italy, Economic Research and International Relations Area.
    4. Cavallari, Lilia & Romano, Simone & Naticchioni, Paolo, 2021. "The original sin: Firms’ dynamics and the life-cycle consequences of economic conditions at birth," European Economic Review, Elsevier, vol. 138(C).

    More about this item

    Keywords

    Total Factor Productivity; Geographical Differences.;

    JEL classification:

    • D14 - Microeconomics - - Household Behavior - - - Household Saving; Personal Finance
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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