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

  • Giovanni Federico (a1), Alessandro Nuvolari (a2) and Michelangelo Vasta (a3)
Abstract

The origins of the Italian North-South divide have always been controversial. We fill this gap by estimating a new dataset of real wages (Allen 2001; Allen et al. 2011) from Unification (1861) to WWI. Italy was very poor throughout the period, with a modest improvement since the late nineteenth century. This improvement started in the Northwest industrializing regions, while real wages in other macro-areas remained stagnant. The gap Northwest/South widened until the end of the period. Focusing on the drivers of regional trends, we find that human capital formation exerted strong positive effect on the growth of real wages.

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We would like to thank Sara Pecchioli for outstanding research assistance and Alberto Montesi for his assistance in bibliographical research. We are particularly grateful to Robert Allen, Gabriele Cappelli, Myung Soo Cha, Stefano Chianese, Claudio Ciccarelli, Emanuele Felice, and Tomas Cvrcek for sharing their data with us. We also thank Ann Carlos, two anonymous referees, and Gabriele Cappelli, Federico Crudu, Emanuele Felice, Laura Magazzini, Paolo Malanima, Pablo Martinelli, Leandro Prados de la Escosura, and Silvia Tiezzi for helpful suggestions. The paper also benefited from the comments of participants at the 6th edition of EH/tune Economic History Workshop (Siena, 2016), the Economic History Society Conference (Royal Holloway London, 2017), the 8th World Congress of Cliometrics (Strasbourg, 2017), and at seminars at the Catholic University of Milan and at the University of Siena.

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