We propose an endogenous growth model with public capital and an imperfect labor market to account for the long run regional development of the Italian economy. A stylized model of a monopolistic Union characterized by heterogeneity in its members’ reservation wage creates a spatially rigid wage. We then include the above mechanism in a growth model where public investment is subject to installation costs and analyze the effects of policy changes in the period 1951-2004 on the long run growth and unemployment rate of the macro areas of Italy: Center-Northern and Southern. The calibration exercise with parameters values grounded in the economic history literature is then performed. Our results indicate that two permanent institutional innovations deeply affected the long run dynamics of the Italian regional development, both in terms of growth and unemployment: the centralization of the wage bargaining and the decentralization of the governmental functions with the birth of the ordinary regions.

Spatial Labor Rigidity and Long Run Growth: the Case of Italian Regional Divide

MAURO, LUCIANO;CARMECI, GAETANO
2016

Abstract

We propose an endogenous growth model with public capital and an imperfect labor market to account for the long run regional development of the Italian economy. A stylized model of a monopolistic Union characterized by heterogeneity in its members’ reservation wage creates a spatially rigid wage. We then include the above mechanism in a growth model where public investment is subject to installation costs and analyze the effects of policy changes in the period 1951-2004 on the long run growth and unemployment rate of the macro areas of Italy: Center-Northern and Southern. The calibration exercise with parameters values grounded in the economic history literature is then performed. Our results indicate that two permanent institutional innovations deeply affected the long run dynamics of the Italian regional development, both in terms of growth and unemployment: the centralization of the wage bargaining and the decentralization of the governmental functions with the birth of the ordinary regions.
9788883037757
9788883037764
File in questo prodotto:
File Dimensione Formato  
Carmeci_Spatial Labor Rigidity and Long Run Growth.pdf

accesso aperto

Tipologia: Documento in Versione Editoriale
Licenza: Creative commons
Dimensione 12.11 MB
Formato Adobe PDF
12.11 MB Adobe PDF Visualizza/Apri

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11368/2902782
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus ND
  • ???jsp.display-item.citation.isi??? ND
social impact