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Forced labour in manufacturing and the local industry structure: the case of Italy

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  • Denti, Daria
  • Iammarino, Simona

Abstract

Do spatial socio-economic features influence the demand for forced labour also in places where it is illegal and socially unacceptable? This article provides an answer to this question by estimating the effect of the characteristics of the local industry structure on forced labour in manufacturing (FLM hereafter) using Italy as a case study. Conceptually, we bridge the literature on forced labour with economic geography to empirically test the effect of local industry specialization and firm size. Exploiting a novel database of geo-tagged episodes of FLM across Italian local labour market areas, we find that industry specialization and the share of micro-firms in the industry that specializes a place are key predictors for FLM. Instrumental variable estimates relying on novel data on the geography of Italian firms in 1911 show that results are robust to endogeneity threats. Findings also hold to the inclusion of potential confounding features, like the presence of migrants and institutional quality, and to spatial dependency tests. Moreover, results support the relevance of addressing the spatial dimension for a thorough understanding of FLM. Overall, the article contributes to the currently scant quantitative evidence on the micro-regional determinants of forced labour in the Global North, which is still relatively unexplored.

Suggested Citation

  • Denti, Daria & Iammarino, Simona, 2025. "Forced labour in manufacturing and the local industry structure: the case of Italy," LSE Research Online Documents on Economics 128498, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:128498
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    Keywords

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    JEL classification:

    • J70 - Labor and Demographic Economics - - Labor Discrimination - - - General
    • J80 - Labor and Demographic Economics - - Labor Standards - - - General
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R23 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Household Analysis - - - Regional Migration; Regional Labor Markets; Population

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