Railways and the Productivity Gap in Italy: Persistence and Divergence after Unification

36 Pages Posted: 28 Jul 2015

See all articles by Nicola Pontarollo

Nicola Pontarollo

Università degli Studi di Milano-Bicocca

Roberto Ricciuti

University of Verona - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: July 27, 2015

Abstract

The political unification of Italy in 1861 led to the establishment of a single market, by removing the trade barriers across the pre-existing states, with a single currency. Market integration was the economic outcome of this process. At the same time, the Kingdom of Italy started a large infrastructure project to spread railways, which were largely confined in Northern Italy, all over the country. Using tools from spatial econometrics, we find that railways played a positive effect on productivity, but this effect was stronger in the areas in which railways were already built. Moreover, railways helped industrial firms to locate closer to water sources and gain access from there to the overall market. This effect is in line with New Economic Geography according to which infrastructure lead to a widening of territorial disparities.

Keywords: railways, productivity, economic growth, spatial econometrics

JEL Classification: N730, N930, L920, C230, O180

Suggested Citation

Pontarollo, Nicola and Ricciuti, Roberto, Railways and the Productivity Gap in Italy: Persistence and Divergence after Unification (July 27, 2015). CESifo Working Paper Series No. 5438. Available at SSRN: https://ssrn.com/abstract=2636222

Nicola Pontarollo

Università degli Studi di Milano-Bicocca ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, Milan 20126
Italy

Roberto Ricciuti (Contact Author)

University of Verona - Department of Economics ( email )

Via dell'Artigliere, 8
37129 Verona
Italy

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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