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Productivity and Wages: The Gap between North and South

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  • V. Daniele

Abstract

In Southern Italy, labour productivity in industry and market services is 32% lower than in the Centre-North. Between the two areas, also average wage differs. Despite the collective bargaining system, in Southern regions the average wage is 25%lower than in the most developed part of the country. Overall, unit labour cost, as measured by the ratio between wages and value added, is similar in the two areas. Given the historical development disparities that characterise Italy, the industrial structures of the two parts of the country notably differ, in terms of sectoral composition, size of firms, number of multinational companies and exporting firms. Furthermore, in the South, price level is 10-15% lower than in the Centre-North. These structural disparities may explain a substantial part of regional gaps in labour productivity and average wage.

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  • V. Daniele, 2019. "Productivity and Wages: The Gap between North and South," Rivista economica del Mezzogiorno, Società editrice il Mulino, issue 2, pages 375-404.
    • Handle: RePEc:mul:jqyfkm:doi:10.1432/94890:y:2019:i:2:p:375-404
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    1. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    2. Fabrizio Erbetta & Carmelo Petraglia, 2011. "Drivers of Regional Efficiency Differentials in Italy: Technical Inefficiency or Allocative Distortions?," Growth and Change, Wiley Blackwell, vol. 42(3), pages 351-375, September.
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