In the years of the prolonged post-crisis recession, the well-known North-South divide in Italy has significantly worsened. Several structural weaknesses limit both post-crisis recovery and socioeconomic convergence. A greater understanding of the economic contribution of workers’ human capital, which is not fully exploited in Italy, could address the two issues. We analyze the effects of human capital on local economic performance and productivity, along with other socioeconomic variables, controlling for the endogeneity problem. Workers with a better education can promote economic recovery through productivity enhancement in the South, while traditional aspects related to industrialization are significant in the “wealthy North”. However, structural aspects, such as the local financial systems, must be developed to start a path to convergence for the North and the South.

Introduction

The presence of areas in a country with very different levels of economic development is considered the North-South problem, as originally described for many countries by Jeffrey G. Williamson (1965). This economic problem occurs when an area (“North”) has an average income that is significantly higher in comparison to the rest of the country (“South”). Usually, β and σ convergences in the income levels are calculated to test this problem (as, for example, Young et al., 2008, for the US; Rapacki and Próchniak, 2009, for several countries)1 . In Italy, convergence has been lacking in the last few decades, and despite some signs of club convergence (Piacentino and Vassallo, 2011), the tests do not indicate the causes or the direct aspects in which to intervene to bridge the economic gap. The economic literature provides many details on the Italian dualism: Lagravinese (2015) finds signs of post-2007 crisis resilience due to the different regional economic specializations, Brida et al. (2014) show traces of club convergence from income data confirming the distance between Center-North and South, and Greco et al. (2017) find a socioeconomic dualism that is even more pronounced with respect to the income inequalities but with good performances in some southern regions. Studies that consider many macroeconomic causes of the Italian regional gap exist (mainly testing income convergence), while more attention is warranted for the multidimensional aspect of a fundamental resource such as human capital and especially its utility in the post-2007 recession period. With respect to the aforementioned researches, we analyze the local economic characteristics that influence the divergent paths of development by using several variables related to the education of the labor force (human capital), while controlling for other social and economic aspects characterizing the Italian context. In particular, our research question is: can education and vocational training be the correct stimuli for post-crisis economic recovery? Moreover, knowing the strong North-South dualism2 , we also wonder if the contribution of human capital in the two macro areas is different.