Events at CERGE-EI
Tuesday, 13 February, 2024 | 10:00 | Room 402 | Job Talk Seminar
Lorenzo Incoronato (University College London) "Place-Based Industrial Policies and Local Agglomeration in the Long Run"
University College London, United Kingdom
Authors: Lorenzo Incoronato, Salvatore Lattanzio
Abstract: This paper studies a large place-based industrial policy (PBIP) aimed at establishing industrial clusters in Italy in the 1960s and 1970s. Combining historical archives spanning one century with administrative data and leveraging exogenous variation in government intervention, we investigate both the immediate effects of PBIP and its long-term implications for local development. We find that the policy led to agglomeration of workers and firms in the targeted areas persisting well after its termination. By promoting hightechnology manufacturing, PBIP boosted demand for business services and favored the emergence of a skilled local workforce. Over time, this shifted the local economy towards high-skill industries and produced a spillover from manufacturing – the only sector targeted by the program – to services employment. We document a stark rise in knowledgeintensive services, which contribute significantly to the long-lasting employment effects of PBIP. Cost-benefit analysis indicates that the policy generated net gains in the long run.
Full Text: Place-Based Industrial Policies and Local Agglomeration in the Long Run
