REGIONAL DISPARITIES IN ITALY OVER THE LONG RUN: THE ROLE OF HUMAN CAPITAL AND TRADE POLICY

The well known Italian dualism in terms of development disparities between the North and the South has been one of the most debated issues in economics over the last few decades. In the aftermath of the Unification of Italy, the gap between North and South in terms of human capital stock was more relevant than the dualism in terms of GDP per capita. In 1871 the percentage of population able to read and write was 57.7% in the North-West and only 15.9% in the South, while there is no evidence of income disparities. Interestingly, in 1951 income per capita in Southern regions was only about 50% of that of the North. Bearing this evidence in mind, and using a novel panel dataset, we in-vestigate the pattern of regional development focusing on the role of initial hu-man capital conditions as a major driver of growth over the period 1891–1951. We provide further empirical evidence on the impact of protectionist trade poli-cies in the late 19th century on long run development. We find that a numerical-ly large human capital stock in the North provided fertile soil for early industri-alization, while the protection of agriculture resulted in an incentive for the South to specialize further in the primary sector, which turned out to be harmful in the long run.REGIONAL DISPARITIES, HUMAN CAPITAL, TRADE POLICY

Employment and technological change: on the geography of labour market adjustments

This paper investigates the impact of technological change on local labour market outcomes in Britain. Using a newly assembled panel database for the period 2000-2007 and a directly observed measure of technological change based on patent records, the analysis suggests that employment levels are relatively lower in places that are more exposed to technological shocks depending on their existing industrial specialization. Results also suggest that the magnitude of the impact varies across locations and typologies of workers. The negative impact on employment is particularly evident in areas characterized by weaker agglomeration economies and specialization in mature industries and for intermediate skilled individuals employed in “routinary” activitie

Moving people with ideas - innovation inter-regional mobility and firm heterogeneity

This paper looks at the link between inter-regional mobility, innovation and firms’ behavioural heterogeneity in their reliance on localised external sources of knowledge. By linking patent data (capturing inventors’ inter-regional mobility) with firm-level data (providing information on firms’ innovation inputs and behaviour) a robust identification strategy makes it possible to shed new light on the geographical mobility-innovation nexus. The analysis of English firms suggests that firm-level heterogeneity – largely overlooked in previous studies - is the key to explain the innovation impact of inter-regional mobility over and above learning-by-hiring mechanisms. A causal link between inflows of new inventors into the local labour market and innovation emerges only for firms that make the use of external knowledge sources an integral part of their innovation strategies

The role of education for amenity based sorting in British cities

This paper investigates the relation between amenities and skills by looking at the sorting behavior of skilled individuals across neighbourhoods within British cities. Using a detailed micro dataset on housing transactions we recover a composite measure of local amenities that captures the level of attractiveness of each neighbourhood. By combining the amenity measure with data on British individuals we analyse how the cost associated with the consumption of amenities is distributed across education groups and across neighborhoods within cities defined as integrated labour markets. Results show that, holding constant the availability of job opportunities, high skilled individuals exhibit a moderate preference bias towards amenity consumption as they tend to sort into more attractive neighborhoods than lower skilled individuals with the same income

Foreign multinationals and domestic innovation: intra-industry effects and firm heterogeneity

This paper looks at foreign Multinational Enterprises (MNEs) investing in the UK and at their impact on the innovation performance of domestic firms active in their same sector. By employing data on Foreign Direct Investments matched with firm-level information the paper develops a direct measure of capital inflows at a three-digit industry level. In order to capture innovation in both manufacturing and services the paper relies on a broader proxy for firm innovativeness based on the Community Innovation Survey (CIS). The results suggest that domestic firms active in sectors with greater investments by MNEs show a stronger innovative performance. However, the heterogeneity across domestic firms in terms of internationalization of both their market engagement and ownership structure is the main driver of this effect

The presence of foreign multinationals in the UK boosts innovation by domestic firms

Capacity to absorb new knowledge is essential, find Ricardo Crescenzi, Luisa Gagliardi and Simona Iammarino

Intagible assets and local economic performance

The thesis is aimed at the empirical investigation of the role of intangible assets, in particular human and social capital, as relevant determinants of local economic performances. Traditional theories of economic growth, focusing on the role of physical capital as fundamental engine of economic growth, have failed to explain much of the differences in the level of income and development among regions and countries. The direct consequence of this evidence was the increasing effort in identifying alternative mechanisms and determinants. In line with this trend the role of intangible assets as determinants of economic outcomes has recently gained increasing importance in the economic literature. However, the empirical evidence remains limited and controversial. The thesis aims at filling this gap by developing a sound analytical framework and robust empirical strategies for the assessment of the potential economic dividend of soft factors. The analysis is developed through three independent and original papers grounded into different streams of literature and covering in a consistent manner a variety of contributions: from traditional economic theory on the role of human capital and externalities as main source of endogenous growth (Romer, 1986, Lucas, 1988), to the theory and empirics of social capital (Putnam, 1990, Granovetter, 1973, Keefer and Knack, 1997) and some more recent contributions regarding the role of migration and human capital externalities externalities ( Breschi and Lissoni, 2000, Moretti, 2004, Duranton, 2007, Faggian, McCann, 2006, 2009). In each of the three papers the empirical investigation is provided building on different econometric techniques (cross section, first difference, panel data, instrumental variables) coherently with the underlying research questions, theoretical motivations and characteristics of the available data.The papers provide robust empirical evidences in support of the hypothesis regarding the relevant role of intangible assets as crucial determinant of the economic and innovative performance of local areas. The main findings are consistent over changes in the geographical unit of analysis and methodological settings

Offshoring and the geography of jobs in Great Britain

This paper investigates the impact of the offshoring of production activities on domestic jobs in Great Britain. The paper considers both the spatial heterogeneity across local labour markets and variations in the intensity of outward flows of investments abroad (OFDI) across industries in order to shed new light on the job creation/destruction implications of offshoring. The results suggest that offshoring may generate significant job losses in routine occupations in areas that have been more exposed to the relocation of production abroad, regardless of whether the relocation has been to developed or developing/emerging countries. Offshoring to developing/emerging countries has, by contrast, a positive effect on the generation of non-routine jobs. Efficiency gains accruing from the international reorganization of production increase in the long-run, with compensation mechanisms operating through growth of employment in higher value added activities at home. Overall, our results uncover important spatial and interpersonal inequalities in job creation, which provide new challenges for public policy

The innovative performance of firms in heterogeneous environments : the interplay between external knowledge and internal absorptive capacities

This paper investigates the link between firm-level innovative performance and innovation prone external environments where knowledgeable individuals tend to cluster. Organizational ambidexterity and absorptive capacities (potential and realized) make it possible for firms to leverage the availability of external knowledge and boost their innovation performance. The empirical analysis focuses on England and is based on a novel combination of Community Innovation Survey (CIS) firm-level data and patent data. The results show that only firms complementing potential and realized absorptive capacities are able to take advantage of favorable external environments by actively combining internal and external sources of knowledge