This paper studies the long-run impact of place-based industrial policy, analyzing a large-scale cluster program conducted in Italy during the 1960s and 1970s. Leveraging administrative data over a century and exogenous variation in the assignment rules, we document higher concentration of workers and firms in the targeted areas lasting well beyond the policy’s end. By promoting high-technology manufacturing industries, the intervention fostered a skilled local workforce and spurred demand for business-support activities. Over time, this produced spillovers from manufacturing to knowledge-intensive services, with sustained gains in local wages and human capital. We illustrate that the persistent effects of place-based policy depend on the initial conditions of host locations.

This paper presents micro-empirical evidence on the effects of wage-setting decentralization. Our setting is Italy, where employers are required to comply with occupation- and industry-specific wage floors set by national collective bargaining agreements. We show that opting out of these agreements reduces wages but increases workers’ employment and retention within firms. These effects are most pronounced in the more productive North, where the overall impact on workers’ earnings is slightly positive. In contrast, in the South, wage losses outweigh employment gains, leading to a net decline in earnings. We also find that increased wage-setting flexibility is associated with higher firm survival rates in both regions. The regional divergence in outcomes aligns with a monopsony framework in which productivity and labor supply elasticities vary spatially.

This paper examines how salary caps affect retention and selection of managerial talent in the public sector. We exploit a 2014 reform in Italy that capped top public-sector salaries. Managers affected were about 5 percentage points more likely to move to the private sector. Exit propensity was especially high among executives of state-owned companies, while managers in traditional public administration largely remained in public employment despite substantial pay cuts. Exiting managers were positively selected, reducing average managerial quality in state-owned companies by about 2 percent. The reform generated modest fiscal savings of around 0.1 percent of public-sector labor costs.

This paper documents substantial fiscal waste in the context of one of the world’s largest regional development programs — the EU Cohesion Policy. We study Italy, and find that 20% of funding commitments are never paid out and funneled into unfinished or never-started projects. In our setting, this happens for reasons unrelated to fiscal constraints: municipalities appear to simply leave money on the table. Foregone spending is more prevalent in Southern regions, but there is also stark variation across municipalities within regions. We show that such under-utilization of available funds is strongly associated with limited administrative capacity of local governments.

Women often struggle to re-enter employment after career breaks, possibly because employers are uncertain about their productivity. We study whether hiring subsidies help firms overcome this uncertainty and hire from this group. Exploiting an Italian policy that temporarily cut payroll taxes for women hired from non-employment, we find that firms persistently hire more women with career breaks, including mothers, following subsidy adoption. Consistent with employer learning about target-group productivity, firms with better initial matches later hire more from this group. Subsidized workers also show stronger labor-market attachment. These findings suggest demand-side interventions can complement supply-side policies in addressing gender gaps.

Government transfers might have long-lasting consequences on electoral outcomes. We study a regional policy implemented in Italy over the second half of the twentieth century and leverage variation in transfers to show that parties promoting more state intervention in the economy performed better in the targeted areas relative to places that were not subsidized, decades after the end of the policy. This effect does not seem to mirror long-term differences in the economic performance of treated and control areas, which were small, nor other attitudes within the electorate.

This paper studies the relationship between demographic change and entrepreneurship and highlights its spatial dimension. We digitise historical censuses to reconstruct entrepreneurship rates and the age structure of Italian provinces since the 1960s. We develop an estimation framework that relates entrepreneurship to granular age cohorts of the local population, leveraging instrumental variables to address endogeneity issues. Our results uncover stark regional heterogeneity. In Northern Italy, we find a hump-shaped age–entrepreneurship profile peaking at cohorts aged 30–39 years. In the South, entrepreneurship increases with age. Regional differences in the local business environment partly account for the different estimated profiles.

This paper investigates the effects of demographic shifts on labor productivity by leveraging variation in the age structure of Italian regions. These effects are analyzed along a first channel — the direct relation between population age and productivity — and a second channel capturing the productivity implications of a more or less dispersed age distribution. We propose an estimation framework that relates regional productivity to the entire age distribution of the working-age population and use instrumental variable techniques to address endogeneity issues. The estimates yield a hump-shaped age-productivity profile peaking between 35 and 40 years. We also document non-linear effects of regional age dispersion on productivity.