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

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.

Economic Growth and the Development of Real Wages: Swedish Construction Workers’ Wages in Comparative Perspective, 1831–1900

“…We focus the comparison on London, Amsterdam, Antwerp, and Paris. These cities had the highest wages of those in Allen's database during the nineteenth century, substantially higher than in Southern and Eastern Europe (e.g., Federico, Nuvolari, and Vasta 2019). We begin by using respectability baskets to plot welfare ratios of unskilled helpers in Sweden and compare them with the corresponding rates in London and Amsterdam using data from Allen (2001).…”

“…We follow Federico, Nuvolari, and Vasta (2019) in considering the relative contribution of wage and price changes to the resulting change in welfare ratios. During the nineteenth century, rapid globalization led to a convergence in prices across the world.…”

Prussia disaggregated: the demography of its universe of localities in 1871

“…In fact, the average literacy rate in Prussian manors in 1871 was much higher than in large Spanish cities such as Barcelona (0.50), Madrid (0.66), or Valencia (0.40) three decades later, in 1900 [Cinnirella et al (2020)]. Compared to Italy, the literacy level in the Prussian manors was considerably higher than the literacy rate of Turin (0.58), the city with the highest level of literacy in 1871 Italy [Federico et al (2019)].…”

“…Compared to Italy, the literacy level in the Prussian manors was considerably higher than the literacy rate of Turin (0.58), the city with the highest level of literacy in 1871 Italy [Federico et al . (2019)].…”

Woe to the vanquished? State, ‘foreign’ banking and financial development in Southern Italy in the nineteenth century

“…While scholars still debate the extent of the North–South divide at the time of unification as measured by socioeconomic indicators (Daniele and Malanima 2011; Vecchi 2011; Ciccarelli and Fenoaltea 2013; Felice and Vasta 2015; Cappelli 2016; Nuvolari and Vasta 2017; Ciccarelli and Weisdorf 2018; Felice 2018, 2019; Federico, Nuvolari and Vasta 2019; Di Martino, Felice and Vasta 2020), financial historians have emphasised the innovative character of Southern finance since the early modern times (Costabile and Neal 2018), its trials during the difficult transition to an Italian national market (Demarco 1958, 1963; Giuffrida 1972–3; De Rosa 1989–92) and the downsides for the South of monetary integration with the North in what was a far cry from an optimal currency area (Foreman-Peck 2006; Chiaruttini 2018; Vicquéry 2018). Southern banking history, in particular, is traditionally presented as a series of bright achievements before unification and, thereafter, of bitter competition with the Piedmontese National Bank ( Banca Nazionale ) – the future Bank of Italy – under the malevolent eye of a national government with Northern sympathies 1 .…”