DP12358 The Origins of the Italian Regional Divide: Evidence from Real Wages, 1861-1913

Author(s): Giovanni Federico, Alessandro Nuvolari, Michelangelo Vasta
Publication Date: October 2017
Keyword(s): 19th century, Italy, real wages, regional divide
JEL(s): N01, N13, N33
Programme Areas: Economic History
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=12358

The origins of the Italian North-South divide have always been controversial. We fill this gap by estimating a new data-set of real wages (Allen 2001) from the Unification (1861) to WWI. Italy was very poor throughout the period, with a modest improvement since the late 19th century. This improvement started in the North-West industrializing regions, while real wages in other macro-areas remained stagnant. The gap North-West/South widened until the end of the period. Focusing on the drivers of the different regional trends, we find that human capital formation exerted strong positive effect on the growth of real wages.