Firm Productivity and Institutional Quality: Evidence from Italian Industry
Abstract: This paper aims to contribute to the debate on the determinants of differentials in firms productivity. The case of Italy looks particularly interesting, since there is a substantial and long-lasting productivity gap between industrial firms located in the southern regions and those in the rest of the country. We test the hypothesis that macro factors, especially the quality of institutions, play a central role in explaining firm productivity in Italy. Consistent with previous studies, our results show that institutional quality is one of the basic determinants of the observed TFP differentials across firms in different Italian regions.
