Culture, Discrimination and Individual Productivity: Regional Evidence from Personnel Data in a Large Italian Firm

This paper documents the existence of striking regional differences in the reported behaviour of employees working within the same firm, but in different Italian regions. In particular, the frequency of recorded and punished misconduct episodes is significantly higher among employees working in the south; migrants moving from the north to the south assimilate completely to the higher rate of misconduct in the receiving region, while migrants moving from the south to the north assimilate only partially to the lower misconduct rate in the receiving region. These differences can, in principle, be attributed to discrimination or to individual effort. The absence of any evidence of regional discrimination in the process by which misconduct episodes are signalled and brought to the attention of the personnel office, and in terms of careers and earnings, suggests that the second explanation is more likely to be true. This conclusion is also supported by the evidence on absenteeism that replicates the findings on misconduct. While the main contribution of this paper is to measure, in a novel way, regional productivity differentials due to individual effort, it does not explore the ultimate causes of these differentials (e.g. individual characteristics or multiple equilibria), a crucial issue that will be addressed in a forthcoming companion paper.