Abstract
Using a “difference-in-differences” approach, we show that the share of entrepreneurs in Italy declined more in industrial districts than in comparable labour markets during the 3 years following the 2008 recession. We have examined alternative explanations of this finding, thus concluding that it is consistent with the idea that intense social interactions typical of industrial districts act as a multiplier that amplifies the response to shocks. However, we cannot exclude that this may translate into a positive effect on employment as the flows from entrepreneurship to employment appear to be greater within industrial districts.
This chapter summarizes and extends the empirical research reported in Brunello and Langella, 2016, Local agglomeration, entrepreneurship and the 2008 recession: evidence from Italian industrial districts, Regional Science and Urban Economics, 58, 104–114.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
We decided to exclude the South of Italy from this analysis due to the lack of this type of industrial agglomerations in the area. As we will further explain in the remainder of the paper, we also exclude large urban areas and local labour markets that show a limited level of comparability to industrial districts. The reason for this is to increase precision of our estimates, although, as we will discuss including those areas that does not alter the core of our findings.
- 2.
This is the age range that concentrates the bulk of the entrepreneurial rate. Very few entrepreneurs are observed below the age of 35, and we excluded people aged more than 55 due to high rates of attrition to retirement.
- 3.
This assumption is consistent with xf ∈ [0, 1].
- 4.
Wage bargaining in Italy occurs mainly at the national and sectorial level (Du Caju et al. 2009). Ammermuller (2010) find that wages in Italy do not respond to local unemployment. Guiso and Schivardi (2011) assume that the common wage is determined by the condition that national labour demand equals national labour supply.
- 5.
Small and medium enterprises are defined by the European Commission as firms having less than 250 employees and an annual turnover of up to EUR 50 million or a balance sheet total of no more than EUR 43 million (Commission Recommendation of May 6 2003). Italian industrial structure is characterised by the prevalence of SME. According to the Italian Statistical Institute (ISTAT), in 2013 the average firm size in Italy is of 3.7 employees.
- 6.
As discussed below, using a broader definition (self-employment status) does not affect qualitatively our empirical results.
- 7.
The average share of entrepreneurs with employees in 2006 was 11.5% for individuals aged 35–55, 6.4 for those aged 30–34 and 3.1% for individuals aged 25–29.
- 8.
We exclude urban areas such as Turin, Milan, Venice, Genoa, Bologna, Florence and Rome. We exclude large urban areas and the South of Italy in order to increase the precision of our estimates. South of Italy is characterised by the lack of the industrial agglomerations we focus on in this chapter, while large urban areas show a different industrial structure with respect to the rest of the country. Including those in the analysis does not substantially alter our results.
- 9.
Formal tests of the hypothesis that pretreatment tests are parallel are discussed below.
- 10.
Regional values are from the Italian regional accounts.
- 11.
The propensity score is defined as e(x) = Pr ob(ID = 1| X = x), the probability of being treated conditional on observables X.
- 12.
The low rate might seem surprising. Notice however that unemployment in Italy is the highest among those living in the South, who are excluded from our sample.
- 13.
- 14.
As in the previous experiments, as a preliminary step, we redefine the common support by excluding exports from the vector of covariates defining the propensity score. We have also experimented with real 2007 exports per local inhabitant rather than log real exports, with no qualitative change. Results are available from the authors upon request.
- 15.
Measures (a) and (b) are calculated for the time interval of 2004–2005 on the basis of municipal data (source: Banca d’Italia) aggregated at the local labour market level.
- 16.
Labour pooling as a feature of Italian industrial districts has been investigated by D’Addario, 2011, who finds that living in an ID area increases the probability of finding a job, and by Andini et al. (2012), who conclude that the two concepts are broadly unrelated.
- 17.
The estimated differential effect for the inactive (column (2) of the table) is very small and imprecisely estimated.
- 18.
These rates are computed by dividing the flows by the state variable in the previous year.
- 19.
Similar qualitative patterns emerge for inflows from out of the labour force to entrepreneurship.
- 20.
See De Blasio and Di Addario (2005).
References
Ammermuller, A. (2010). Wage flexibility in regional labour markets: Evidence from Italy and German. Regional Studies, 44(4), 401–421.
Andini, M., De Blasio, G., Duranton, G., & Strange, W. (2012). Marshallian labour market pooling: Evidence from Italy, Temi di Discussione Banca d’Italia, n.922, Rome.
Cingano, F., & Schivardi, F. (2004). Identifying the sources of local productivity growth. Journal of the European Economic Association, 2(4), 720–742.
D’Amuri, F. (2010). The impact of the great recession on the Italian labour market. Mimeo, Bank of Italy.
De Blasio, G., & Di Addario, S. (2005). Do workers benefit from industrial agglomeration? Journal of Regional Science, 45(4), 797–827.
Du Caju, P., Gautier, E., Momferatu, D., & Ward-Warmedinger, M. (2009). Institutional features of wage bargaining in 23 European Countries, the US and Japan. Ekonomia, 12(2), 57–108.
Faggio, G., & Silva, O. (2014). Self-employment and entrepreneurship in urban and rural labour markets. Journal of Urban Economics, 84, 67–85.
Fairlie, R. W. (2013). Entrepreneurship, economic conditions, and the great recession. Journal of Economics & Management Strategy, 22(2), 207–231.
Glaeser, E. L., Kallal, H. D., Scheinkman, J. A., & Shleifer, A. (1992). Growth in cities. Journal of Political Economy, 100(6), 1126–1152.
Glaeser, E. L., Sacerdote, B. I., & Scheinkman, J. A. (2003). The social multiplier. Journal of the European Economic Association, 345–353.
Guiso, L., & Schivardi, F. (2007). Spillovers in industrial districts. The Economic Journal, 117(516), 68–93.
Guiso, L., & Schivardi, F. (2011). What determines entrepreneurial clusters? Journal of the European Economic Association, 9(1), 61–86.
Guiso, L., Sapienza, P., & Zingales, L. (2004a). Does local financial development matter? The Quarterly Journal of Economics, 119(3), 929–969.
Guiso, L., Sapienza, P., & Zingales, L. (2004b). The role of social capital in financial development. The American Economic Review, 94(3), 526–556.
Lucas, R. E., Jr. (1978). On the size distribution of business firms. Bell Journal of Economics, 9(2), 508–523.
Michelacci, C., & Silva, O. (2007). Why so many local entrepreneurs? The Review of Economics and Statistics, 89(9), 615–633.
Porter, M. E. (1998). Competitive advantage: Creating and sustaining superior performance. New York: Simon & Schuster.
Puga, D. (2010). The magnitude and causes of agglomeration economies. Journal of Regional Science, 50(1), 203–219.
Putnam, R. (2000). Bowling alone. The collapse and revival of American community. New York: Simon & Schuster.
Rosenthal, S. S., & Strange, W. C. (2003). Geography, industrial organization and agglomeration. Review of Economics and Statistics, 85(2), 377–393.
Sianesi, B. (2005). Propensity score matching. London: Institute for Fiscal Studies/Mimeo.
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2018 Springer International Publishing AG, part of Springer Nature
About this chapter
Cite this chapter
Brunello, G., Langella, M. (2018). Italian Industrial Districts and the 2008 Recession. In: Belussi, F., Hervas-Oliver, JL. (eds) Agglomeration and Firm Performance. Advances in Spatial Science. Springer, Cham. https://doi.org/10.1007/978-3-319-90575-4_15
Download citation
DOI: https://doi.org/10.1007/978-3-319-90575-4_15
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-90574-7
Online ISBN: 978-3-319-90575-4
eBook Packages: Economics and FinanceEconomics and Finance (R0)