Italy’s Decline: Getting the Facts Right

Francesco Daveri () and Cecilia Jona-Lasinio ()

No 301, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: The Italian economy is often said to be on a declining path. In this paper, we document that: (i) Italy’s current decline is a labor productivity problem (ii) the labor productivity slowdown stems from declining productivity growth in all industries but utilities (with manufacturing contributing for about one half of the reduction) and diminished interindustry reallocation of workers from agriculture to market services; (iii) the labor productivity slowdown has been mostly driven by declining TFP, with roughly unchanged capital deepening. The only mild decline of capital deepening is due to the rise in the value added share of capital that counteracted declining capital accumulation.

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Related works:
Working Paper: Italy’s decline: getting the facts right (2006)
Journal Article: Italy's Decline: Getting the Facts Right (2005)
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