VOX  CEPR Policy Portal

The origins of the Italian north–south economic divide have always been controversial. This column argues that using real wages in the 19th century, rather than output data, sheds new light on this debate. At unification, there was already a significant gap between real wages in the north and continental south, which widened as the north-west industrialised. The main driver of the growth of real wages in this period was human capital formation.