When agglomeration meets complexity: unequal gains across Italian provinces

Valeria Cirillo, Marialuisa Divella, Eustachio Ferrulli and Giuseppe Simone

No 1805, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: This paper examines how agglomeration and economic complexity jointly shape income inequality across Italian provinces. Using panel data for 103 provinces over 2000-2021, we combine measures of local agglomeration and economic complexity with tax-based indicators of income polarisation. The results show that agglomeration is associated with wider income disparities, reflecting stronger gains at the top of the distribution and weaker outcomes at the bottom. However, complexity significantly moderates this relationship, reducing the inequality-enhancing effects of agglomeration. The findings suggest that the distributional consequences of agglomeration depend on the level of sophistication of local productive structures.

Keywords: Agglomeration; Economic complexity; Income inequality; Italian provinces; Panel-data analyses; Endogenous threshold panel model (search for similar items in EconPapers)
JEL-codes: C23 C24 D31 O14 O15 R12 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:glodps:1805

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