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The North-South divide: Sources of divergence, policies for convergence

Author

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  • Fanti, Lucrezia
  • Pereira, Marcelo C.
  • Virgillito, Maria Enrica

Abstract

Building on the labour-augmented K+S model framework, we analyse the Italian North-South divide by means of an agent-based model (ABM) endogenously reproducing the divergence between two artificial macro-regions. The latter are characterised by identical initial conditions in terms of productive and innovation structures, but different labour market organisations. We identify the role played by these different arrangements on the possible divergence across the two regions. We found that divergences in the labour market reverberate into asymmetric productive performance due to negative reinforcing feedback loop dynamics. We then compare alternative mitigation policies by showing that schemes increasing machine renewal and replacement investment are the most effective in fostering convergence.

Suggested Citation

  • Fanti, Lucrezia & Pereira, Marcelo C. & Virgillito, Maria Enrica, 2023. "The North-South divide: Sources of divergence, policies for convergence," Journal of Policy Modeling, Elsevier, vol. 45(2), pages 405-429.
    • Handle: RePEc:eee:jpolmo:v:45:y:2023:i:2:p:405-429
    DOI: 10.1016/j.jpolmod.2022.10.007
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    Cited by:

    1. Reljic, Jelena & Zezza, Francesco, 2025. "Breaking the divide: Can public spending on social infrastructure boost female employment in Italy?," Economic Modelling, Elsevier, vol. 143(C).
    2. Leone Leonida, 2024. "Visualizing Convergence Dynamics across Regions and States: h -Convergence," Mathematics, MDPI, vol. 12(2), pages 1-17, January.
    3. Niccolò Comerio & Fausto Pacicco, 2024. "The role of tourism in reducing economic inequalities: the case of Italy," Economia Politica: Journal of Analytical and Institutional Economics, Springer;Fondazione Edison, vol. 41(3), pages 839-880, October.
    4. Antonella Rocca & Claudio Quintano, 2024. "Success Stems from STEM Fields: An Analysis of Italian Graduates," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 10(2), pages 761-793, July.
    5. Bonfatti, Andrea & Giarda, Elena, 2025. "Energy price increases and mitigation policies: Redistributive effects on Italian households," Journal of Policy Modeling, Elsevier, vol. 47(2), pages 251-275.
    6. Lucrezia Fanti & Marcelo C. Pereira & Maria Enrica Virgillito, 2024. "The Agents of Industrial Policy and the North-South Convergence: State-Owned Enterprises in an International-Trade Macroeconomic ABM," DISCE - Working Papers del Dipartimento di Politica Economica dipe0041, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    7. Lucrezia Fanti & Marcelo C Pereira & Maria Enrica Virgillito, 2024. "A North-South Agent–Based Model of segmented labor markets: the role of education and trade asymmetries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 33(2), pages 383-423.
    8. Delli Gatti, Domenico & Ferraresi, Tommaso & Gusella, Filippo & Popoyan, Lilit & Ricchiuti, Giorgio & Roventini, Andrea, 2025. "The complex interplay between exchange rate and real markets: An agent-based model exploration," Journal of Economic Behavior & Organization, Elsevier, vol. 238(C).
    9. Alessio Baldassarre & Danilo Carullo, 2025. "Estimating The Impact of the Investment Tax Credit for Southern Italy Regions through a New Sub-National CGE Model," Working Papers wp2025-21, Ministry of Economy and Finance, Department of Finance.

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    Keywords

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    JEL classification:

    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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