Identifying Service Market Reform Priorities in Italy

36 Pages Posted: 24 Apr 2020

See all articles by Nazim Belhocine

Nazim Belhocine

International Monetary Fund

Daniel Garcia-Macia

International Monetary Fund (IMF) - European Department

Date Written: February 2020

Abstract

Italy's labor productivity in market services has declined since 2000, underperforming manufacturing and peer European countries, especially in strongly regulated sectors. A model of monopolistic competition is used to identify which service sectors would benefit more from removing entry and/or exit barriers. Using Italian firm-level data, the paper finds that sectors with high markups, such as professional services, would primarily benefit from removing entry barriers. Sectors with a large mass of unproductive firms, such as retail, would instead benefit from removing exit barriers. Policy recommendations to improve efficiency are outlined in relation to the sectoral priorities identified in the data.

Keywords: Total factor productivity, Price indexes, Unemployment, Development, Labor productivity, service market reform, firm entry/exit barriers, markups, productivity., WP, exit barrier, entry barrier, markup, regulated profession, market service

JEL Classification: L11, L80, E23, E01, E2, O4, Z13, D4

Suggested Citation

Belhocine, Nazim and Garcia-Macia, Daniel, Identifying Service Market Reform Priorities in Italy (February 2020). IMF Working Paper No. 20/39, Available at SSRN: https://ssrn.com/abstract=3583404

Nazim Belhocine (Contact Author)

International Monetary Fund ( email )

700 19th Street NW
Washington, DC 20431
United States

Daniel Garcia-Macia

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

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