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Diagnosing the Italian Disease

49 Pages Posted: 23 Oct 2017  

Bruno Pellegrino

University of California, Los Angeles (UCLA) - Anderson School of Management

Luigi Zingales

University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Date Written: October 2017

Abstract

We try to explain why Italy’s labor productivity stopped growing in the mid-1990s. We find no evidence that this slowdown is due to trade dynamics, Italy’s inefficient governmental apparatus, or excessively protective labor regulations. By contrast, the data suggest that Italy’s slowdown was more likely caused by the failure of its firms to take full advantage of the ICT revolution. While many institutional features can account for this failure, a prominent one is the lack of meritocracy in the selection and rewarding of managers. Familyism and cronyism are the ultimate causes of the Italian disease.

Suggested Citation

Pellegrino, Bruno and Zingales, Luigi, Diagnosing the Italian Disease (October 2017). Available at SSRN: https://ssrn.com/abstract=3057451

Bruno Pellegrino (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States
3122578888 (Phone)
3122578888 (Fax)

HOME PAGE: http://www.anderson.ucla.edu/degrees/phd/phd-students/gem/bruno-pellegrino

Luigi Zingales

University of Chicago - Booth School of Business ( email )

5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR)

77 Bastwick Street
London, EC1V 3PZ
United Kingdom

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