The Political Economy of Italy and the Centre-Periphery Perspective on Europe

This chapter analyses the persistent North-South divide in Italy from a structural labour market perspective. It traces the origins of this divide back to the pre-unification period and examines its development over the past fifteen years. The argument presented is that the southern regions are caught in a vicious cycle characterised by precarious employment, low wages, inadequate skills, limited productive capacity, and low productivity. The structural weaknesses of the Mezzogiorno are perpetuated by a self-reinforcing circle, which exacerbates inequalities and limits economic growth and social cohesion. It is argued that various crises, including the 2008 financial crisis, the sovereign debt crisis, and the Covid-19 pandemic, have worsened structural weaknesses in Europe and Italy, albeit in different ways. These crises have contributed to further fragmentation and weakening of labor. The chapter concludes with policy recommendations to address these disparities. It advocates for targeted and coordinated regional interventions, such as labor market, innovation, and industrial policies, capable of breaking the North-South divide.