Tag Archives: Italy

On the Long-term Determinants of Cultural Traits: Family Structures in the Past

Origins and Implications of Family Structure across Italian Provinces in Historical Perspective

By Graziella Bertocchi (Modena and Reggia Emilia University and IZA) and Monica Bozzano (Modena and Reggia Emilia University)

Abstract: In this study we review the literature on the origins and implications of family structure in historical perspective with a focus on Italian provinces. Furthermore we present newly collected data on three of the main features of family structure: female mean age at marriage, the female celibacy rate, and the fraction of illegitimate births. The data are collected at the provincial level for 1871, the year of Italy’s political unification. The analysis of the data allows us to confirm and quantify the geographic differentiation in family patterns across the country.
We also illustrate the links between family structure and a set of socio-economic outcomes, in the short, medium, and long run.

URL: http://EconPapers.repec.org/RePEc:iza:izadps:dp10327

Distributed by NEP-HIS on: 2017‒06‒25

Review by: Guido Alfani (Bocconi University, Milan)

The recent interest in the long-term determinants of cultural traits has led to a new wave of research on family systems in the past, as well as to debates that renewed old disputes about the actual possibility of identifying areas of coherent family systems and their causal effect on contemporary behaviours. Graziella Bertocchi and Monica Bozzano have been very active in this field, focusing on such a culturally fragmented and varied area as Italy. In this new working paper, they present further evidence at the provincial level from the Italian 1871 census. They show the importance of looking at the sub-national and indeed, at the sub-regional level to identify correctly the prevalent family structures and demographic behaviours. Their data show feeble evidence that the so-called EMP (European Marriage Pattern) is associated with economic development, human capital accumulation and women’s empowerment. These findings are relevant to current debates on European family systems and on their possible permanent effects on cultural traits.

ItalianFamily_earlyXXc

Italian Family, early twentieth-century. Source:  www.novecento.org.

Summary

This paper presents new data, at the provincial level, about family structures in Italy in 1871. In that year, the first national census was made after the conquest of Rome and the incorporation of the residual territories of the former Papal States, and Veneto, into the Kingdom of Italy. The authors provide information about family types, female age to marriage, proportion of brides under age 20, female final celibacy rates, and illegitimacy rates. Family types are classified as nuclear vs complex, as well as according to the four-way classification introduced by Todd (1990) which combines residential habits (neolocal vs patrilocal) and inheritance systems (partible vs impartible): absolute nuclear family, egalitarian nuclear family, stem family, and communitarian family. Additionally, the authors build upon earlier research (Bertocchi and Bozzano 2015) to apply their own classification of Italian families, which distinguishes between egalitarian families with late female age to marriage (found to be prevalent, in 1871, in the North-West of Italy), incomplete stem families (prevalent in the North-East), communitarian families (prevalent in the Centre) and egalitarian families with early age to marriage (prevalent in the South).
Beyond the technicalities of the classification, an important contribution of the article is to clearly show, by means of a set of well-drawn maps, the high variability of family types and behaviours to be found across the Italian peninsula, even in contiguous territories. The obvious consequence of this, is to make it much more difficult to neatly characterize different parts of Italy according to their family systems and prevalent demographic behaviours.
Interestingly, the authors focus on characteristics connected to the so-called European Marriage Pattern (EMP), including nuclear residential patterns, relatively late age to marriage and relatively high final celibacy rates. The prevalence of the EMP has been connected to economic success, as originally hypothesized by Hajnal (1965) and as later assumed by many economic historians and economists (for example, Greif 2006; De Moor and Van Zanden 2010). But in this paper, in the authors’ words, “Overall our results show very feeble evidence that the different characteristics of the EMP are associated with economic development, human capital accumulation, or women’s empowerment” (p. 14). However, the authors do find a significant correlation between some of their indicators and measures of contemporary gender balance. For example, gender equality in economic leadership (measured as the rate of women in managerial positions) in year 2009 is found to grow with the female mean age to marriage in 1871 and to decline with the proportion of brides under age 20 and the prevalence of nuclear families. This is in line with earlier research by Bozzano (2016).
The authors are mindful of placing correctly their discussion in the broader context of current research on the long-term impact of family systems and structures done by economic historians and economists. Consequently they provide to all researchers interested in the field a useful survey of the recent literature (although a better coverage of recent demographic and historical-demographic literature would also have been useful – see for example Reher 1998).

Comment

This paper is an interesting and important contribution to the renewed pan-European research efforts aimed at identifying the characteristics of past family systems. Although many researchers pursue this objective solely to improve our knowledge of the past, others are driven by the aim of finding long-term determinants of differences in current social and economic behaviour. Two examples of this are the “Patriarchy Index” project (Szołtysek et al. 2017) and the recently-started Institutional Family Demography project (IFAMID) led by Arnstein Aassve, which is currently focusing on the measurement of another of Hajnal’s favoured indicators, the prevalence of life-cycle servants, at the European sub-national level. Yet other scholars have analysed previously-neglected aspects of past societies which could also explain current behaviour – for example godparenthood practices, which began to diverge across Europe at the time of the Reformation and which might have led to differences in ways of doing business (Alfani and Gourdon 2012).
The sub-national scale of analysis is a particularly useful characteristic of this paper. First, it allows (at least on principle) for more precise measurement and greater explanatory power. Secondly, and maybe even more importantly, it reminds us that complexity in the geographic distribution of social systems and behaviours is the common feature of most of the European continent. Indeed, a seemingly frequent characteristic of old debates is that they are easily forgotten – and what might have seemed to be final acquisitions need to be re-discovered and re-discussed, decades later. This is the case of debates about the actual possibility of applying broad generalizations to studies of European social-economic dynamics, the most common of which, both when referring to the European continent, or to Italy alone, seems to be the “North vs South” one. Such debates already involved, in a somewhat defensive position, Peter Laslett and his school, but have been renewed due to the popularity acquired by Todd’s more recent classifications among economists and to some degree among economic historians (interestingly, Todd seems to have been much less influential on historians of the family). The debates about the role played by the EMP in determining economic success, which have recently been the object of intense discussion in the pages of the Journal of Economic History (Dennison and Ogilvie 2014; 2016; Carmichael et al. 2016), have old roots. It is still unclear where current discussion will lead us – whether we are bound to conclude that if we examine European family systems closely, they are in fact too diverse and intermixed to be of much use as indicators of persistent cultural divides, or whether we will finally reach a consensus on broad, documentable differences which do not only fit nicely with our views on European societies (even though such views might be more than a little tainted by prejudice and ideology), but do actually explain something. What is clear is that, in order to make the discussion progress in a fruitful way, we need more high-quality data – which is what this paper successfully delivers for Italy.
There are, of course, issues which might be debated further. For example, this paper (like most of its kind) does not discuss the choice of period to measure differences in past family systems. It is not enough to state that the earliest-available encompassing census is used – is 1871 also the right period to measure such differences? Were not family differences already influenced by the Industrial Revolution and the demographic transition, and were not these processes more advanced at that time in the North (and especially in the North-West) than in the South of Italy? And why did the authors not control in their regression analysis for the pre-unification Italian state to which each province belonged, given that they work on a period immediately following the birth of the Kingdom of Italy? Indeed, why should we rule out the possibility that pre-unification states also had permanent effects, perhaps due to some influence on their local family systems? Finally, how far could family systems in 1871 determine differences in cultural traits today, given the intense internal migration processes that affected Italy? Many northern regions today have a very mixed population if we consider where the current population’s ancestors lived in 1871. Should we not conclude that current cultural traits are better explained by past family systems in provinces of out-migration (mostly the southern ones) compared with those of in-migration (mostly the northern ones)? And how could we take this into account, if indeed it is possible?
But these are questions better left for further research and for future debates, which already seem to be looming on the horizon. For now, we should be grateful to the authors of this paper for providing us with new material to ponder.

Selected bibliography

Alfani, G. and Gourdon, V. (2012), “Entrepreneurs, formalization of social ties, and trustbuilding in Europe (fourteenth to twentieth centuries)”, Economic History Review 65 (3), pp. 1005–1028
Bertocchi, G. and M. Bozzano (2015),“Family Structure and the Education Gender Gap: Evidence from Italian Provinces,” CESifo Economic Studies 61, pp. 263–300.
Bozzano, M. (2016), “On the Historical Roots of Women’s Empowerment across Italian Provinces: Religion or Family Culture?”, European Journal of Political Economy, forthcoming.
Carmichael, S. G., De Pleijt, A., van Zanden, J.L. and De Moor, T. (2016), “The European Marriage Pattern and Its Measurement”, Journal of Economic History 76, pp. 196–204.
De Moor, T. and J. L. van Zanden (2010), “Girlpower: The European Marriage Pattern and Labour Markets in the North Sea Region in the Late Medieval and Early Modern Period”, Economic History Review 63, pp. 1–33.
Dennison, T. and S. Ogilvie (2014), “Does the European Marriage Pattern Explain Economic Growth?”, Journal of Economic History 74, pp. 651–693.
Dennison, T. and S. Ogilvie (2016), “Institutions, Demography, and Economic Growth”, Journal of Economic History 76, pp. 215–217.
Greif, A. (2006), “Family Structure, Institutions, and Growth: The Origins and Implications of Western Corporations”, American Economic Review 96, pp. 308–312.
Hajnal, J. (1965), “European Marriage Patterns in Perspective”, in D. V. Glass and D. E. C. Eversley (eds.), Population in History: Essays in Historical Demography, Edward Arnold, London, pp. 101–143.
Reher, D.S. (1998), “Family ties in Western Europe: Persistent Contrasts”, Population and Development Review 24, pp. 203-234
Szołtysek, M., Poniat, R., Gruber, S., Klüsener, S. (2017), “The Patriarchy Index: a new measure of gender and generational inequalities in the past”, Cross-Cultural Research 51 (3), pp. 1-35
Todd, E. (1990), L’Invention de l’Europe. Paris: Éditions du Seuil.

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About the Historic Gap between Rich and Poor Italians

Economic Inequality in Northwestern Italy: A Long-Term View (fourteenth to eighteenth centuries)

By Guido Alfani (Bocconi University)

URL: http://econpapers.repec.org/paper/dondonwpa/061.htm

Review by Emanuele Felice

Summary

The pioneering work by Simon Kuznets placed the evolution and determinants of economic inequality as one of the central subjects in economics and economic history. The recent success of Thomas Piketty’s latest book (see the Book Reviews section of the NEP-HIS Blog) bears witness to inequality being a topic of great interest to a wider public.

However, constructing reliable estimates of inequality for pre-industrial times is a highly-demanding task. This is the ultimate reason why, in spite of good theorizing and much speculation about the subject, we have so few “actual” figures for the Middle Ages and the Modern Era. The paper by Guido Alfani contributes to the latter, thus quenching our thirst for historical data. Indeed, other than van Zanden’s (1995) seminal work on the Low Countries, Alfani’s is the only comprehensive and thorough study of inequality for a large geography (i.e. the Piedmont region) over a long period of time (from the first half of the 14th century to the early 19th century). Moreover, Alfani provides some good interpretative hypotheses and viable explanations for the observed patterns: here there is much to think, and to learn, about the history of pre-industrial societies.

Guido Alfani

Guido Alfani

The article is well-organized and aims to expose as clearly as possible sources and methods − including some thorny, technical issues. Following an introduction where the relevance of the subject is highlighted in the context of previous systematic studies, a first section provides an overview of the progressive extension of and the fiscal reforms introduced by the House of Savoy into the Piedmont (from circa 1350 onwards). By the late 18th century the House of Savoy had become the most expansionist and successful of all the Italian states. However, it was perhaps not the most powerful one as the Bourbon’s rule in the south (i.e Naples and Sicily in the 17th and 18th centuries) was considerably larger and commanded more resources.

The Fountain of Life by  Giacomo Jaquerio ( c. 1375 – 1453) [one of the main exponents of Gothic painting in the Piedmont].

The Fountain of Life by Giacomo Jaquerio ( c. 1375 – 1453) [one of the main exponents of Gothic painting in the Piedmont].

In section 2, Alfani details the sources for his database. These included records of taxable property (estimi or catasti), which the communities of Piedmont compiled in order to distribute the fiscal burden among households. This because they had to decide how to pay the tasso, a direct tax imposed for the first time in 1562 which by the early 17th century had grown into the main fiscal instrument of the Sabaudian domains. About this source Alfini comments:

The “estimi” are particularly convenient for conducting large-scale studies, as they show an impressive stability through space and time. (p.8)

The Italian estimi can be divided in two categories: “per property” which include lands and buildings and were more common; and “per yield” which include capital, credits, and other movables.

Alfani points out that all the sources used in his estimates are based on estimi per property, which thus only track one of the components of wealth, real estates. But he also adds that there is good reason to believe that in pre-industrial societies (which were largely agricultural) wealth inequality is a good proxy of income inequality as the size of land holdings would determine income. Thus income and wealth would tend to move in the same direction − even more as they do today.

Based on the per property estimi, Alfani constructs a database made up of 16 communities and 12 times series. These include six cities and six series of rural communities (it is noted that seven rural communities are grouped in three aggregates, plus other three individual rural communities). This database is impressive indeed. The actual locations it covers are scattered throughout the Piedmont region, with benchmark years stretching from 1311 (Chieri) until 1772 (Saluzzo). A total of 55 estimi were used.

The Piedmont region is noted for its wine and cuisine

The Piedmont region is noted for its wine and cuisine

Sections 3 to 6 offer the main results of the article. In Section 3 he calculates and discusses a Gini index for each of the 55 estimi analysed. Other measures of inequality include the share of wealth owned by the top 5% and 10% of the population as well as inter-decile ratios. Section 4 delves into a discussion about the impact of disease and pandemics on inequality, from the Black Death to epidemics in the 17th century. Section 5 presents estimates of inequality at the regional level for the whole of the Piedmont: specifically estimates of Gini coefficients from the 16th to the end of the 18th centuries, which are then compared with those estimated for the Low Countries by van Zanden (1995). In this section Alfani also calculates the share of wealth owned by the top 10% and 5% at regional level from the 14th to the end of the 18th centuries.

gap4

Comment

From Alfani’s analysis, several findings stand out. Among these, the positive correlation between urban demographic growth and inequality, the fact that cities experienced greater inequality levels than rural areas, or the prominent role of the top rich in determining inequality changes. The most important result, however, is yet another one: the evidence that in Piedmont, during the Early Modern period (16th and 17th centuries), inequality was on the rise, both in cities and in rural areas, and independently from whether the economy was growing or stagnating. As the author states:

«This is a new finding that directly challenges earlier views that tended to explain inequality growth as the consequence of economic development.»(p. 43)

In this respect, it could even be argued that the well-known Kuznets curve should be relativized to a short phase of human history, the Industrial Revolution. This finding also has an impact on the debate about the Italian decline in the 17th century (e.g. Cipolla 1952), insofar as it provides empirical confirmation for an established literature (e.g. Romano 1972) holding that the Italian decline was also due to rising inequality, which reduced the opportunity for productive investments and the size of the national market, at a time of growing international competition.

2011-474--weight-gap-between-rich-and-poor-

Equally important can be the results about the consequences of epidemics for inequality. In this case, Alfani’s inquiry does not confirm earlier hypotheses based on Tuscan data (actually, on the Tuscan city of Pistoia), according to which after the Black Death there was a rise in inequality (Herlihy 1967). The case study of Piedmont tells us quite the contrary, and appears to be consistent with a vast literature stressing the decline of inequality due to higher wages, after the Black Death. The opposite, however, occurred after the plague of the 17th century: now, the rise in inequality (or at least the fact that in the medium term the plague did not prevent inequality from rising) was probably due to «the institutional adaptation that occurred in-between» (p. 44); namely, to the creation of institutions that prevented the fragmentation of inheritance, and thus of real estates, such as the fideicommissa. Quite correctly, in my view, the author reminds us that after the Black Death adaptation to a new environment, where epidemics had become endemic, occurred:

«and for the human species, adaptation also means institutional adaptation» (p. 23).

Alfani_Calamities and the Economy_Palgrave, London, 2013

References

Cipolla, C.M. (1952) ‘The Decline of Italy: The Case of a Fully Matured Economy’, The Economic History Review, 5(2): 178-187.

Herlihy, D. (1967) Medieval and Renaissance Pistoia: The Social History of an Italian Town, 1200-1430. New Haven, CO: Yale University Press.

Romano, R. (1972) ‘Una tipologia economica’, in R. Romano and C. Vivanti (eds.), Storia d’Italia. I caratteri originali. Turin: Einaudi, pp. 254-304.

Van Zanden, J.L. (1995) ‘Tracing the beginning of the Kuznets curve: Western Europe during the early modern period’, The Economic History Review, 48(4): 643-664.

Models of Safe Banking? The European Savings and Cooperative Banks

Savings banks and cooperative banks in Europe

By: Dilek Bülbül, Reinhard H. Schmidt and Ulrich Schüwer (all at Goethe University Frankfurt am Main)

Abstract: Until about 25 years ago, almost all European countries had a so-called three pillar banking system comprising private banks, (public) savings banks and (mutual) cooperative banks. Since that time, several European countries have implemented far-reaching changes in their banking systems, which have more than anything else affected the two pillars of the savings and cooperative banks. The article describes the most important changes in Germany, Austria, France, Italy and Spain and characterizes the former and the current roles of savings banks and cooperative banks in these countries. A particular focus is placed on the German case, which is almost unique in so far as the German savings banks and cooperative banks have maintained most of their traditional features. The article concludes with a plea for diversity of institutional forms of banks and argues that it is important to safeguard the strengths of those types of banks that do not conform to the model of a large shareholder-oriented commercial bank.

URL: http://econpapers.repec.org/paper/zbwsafewh/5.htm

Review by Anthony Gandy

In recent years I have had the pleasure of teaching banking strategy and banking regulation to professional bankers, the vast majority from the Anglo-Saxon sphere. This is a real challenge, they have greater experience of retail, business and corporate banking than I will ever obtain. However, one thing I do know is that they struggle to cope with the concept that the listed, publicly traded, universal bank is not the only institutional model in town. It is of course not the dominant model in many countries. There are real rivals many different backgrounds that challenge the listed banks and have many strengths; to a large degree these strengths maybe due to the restrictions placed upon them.

Summary

The paper Bülbül, Schmidt and Schüwer is a White Paper (No. 5) on Policy from the Center of Excellence SAFE – Sustainable Architecture for Finance in Europe (Goethe University Frankfurt) and was distributed by NEP-HIS on 2014-01-17. It outline the characteristics of savings banks (those with a public ownership foundation, even if that is no longer the whole case) and cooperative banks across Europe and detail the history of these two institutional forms in German, Austria, France, Spain and Italy. Clearly the primary example is Germany where the three-tier banking structure is live and well (if we exclude a few issues!). In Germany there is a co-existence of public savings banks, cooperative banks and private banks. In other regimes the model has changed, but in the case of say France, the cooperatives are incredibly strong even if some of the localism of these institutions has now been lost.

The authors define seven features of savings banks; however, through the passage of reform (some they argue may have been misguided) only the first two are now common across the markets they have reviewed:

  1. A focus on savings and savings mobilization
  2. A clear regional and even local focus
  3. They were/are “public” banks owned or sponsored by a public body in a specific region or locality, and those authorities had/have “obligations” in respect of these local institutions
  4. They are organised under a “public” law, though the authors do not really define this
  5. They were expected to support the local economy and the local people and financially sustainable enterprises
  6. They were expected to adhere to the region or locality of the sponsoring public body – thus avoiding competition between such banks
  7. Maybe most importantly they were part of a “dense and closely cooperating networks of legally independent institutions that constitute a special banking group”

While, to all intense and purposes the seven criteria still hold good in Germany for savings banks, elsewhere it now tends to be just the cooperative banks which maintain the sense of locality, network and non-competition between local and regional players. Even here though, many cooperatives look and act like major national banking groups, some are even competitors in the investment banking markets.

The authors review the two hundred year history of the German savings and cooperative banks, and that of other nations. Though, of course, this is done very swiftly given the space limitations they have. They also try to illustrate how changes in the system has led to weaknesses in some industries which have moved away from the German model. As is outlined in the discussion below, the end of cooperation and coordination of between savings banks in Spain, where local savings banks did not compete in other regions, has had enormous consequences.

While the history is brief, it is informative. I for one was not aware that Raiffeisenbank was named in honour of Friedrich Wilhelm Raiffeisen who in the 19th Century established the concept of rural cooperative banks networked to centralised services organisations. The name is also common to Austrian cooperative banks and is the foundation of the movement elsewhere. I feel I should have known this. The history, especially in recent years is also important in showing why Germany has performed differently in this sector than other countries which ostensibly had similar three-tier frameworks in the past.

In the other country reviews, the focus is more on the last twenty five years. In France for example the cooperative banks have come to dominate much domestic and even international banking. They absorbed the smaller French public savings institutions (through the mergers which resulted in Banque Populaire Caisse d’Epargne (BPCE)) while Crédit Mutuel (CM) and incendie-du-credit-lyonnais[1]Crédit Agricole (Credit A) have acquired a number of private banking groups building corporate and investment franchises. Of course the ultimate expression of this was Credit A’s acquisition of, how shall we put it, the accident prone Crédit Lyonnais giving it stake in corporate and international banking in France.

The author conclude by reviewing (as they do also in the country reviews, especially in the German one) past and current literature on whether public savings banks and cooperatives are inefficient, not incentivised to be competitive or even whether they carry higher risk. Their conclusion is that older research which support these points have now been supplanted by newer research which invalidates these arguments, especially in the light of recent events.

Discussion

One could argue that the case they make in their paper that German local public savings banks did not suffer to any large degree in the financial crisis could be countered by two points. Firstly, while the local savings banks had little exposure to securitised markets or to southern European debt, the structure of their industry would not really allow this anyway. These banks are local, however, they also provide funds to the Landesbanken which act as the central services and, effectively, the centralised treasury. It is they which then use funds to access corporate, investment and international markets. As the authors have point out, the Landesbanken have been hard hit in the financial crisis. Effectively the savings bank and the cooperative banking sector disaggregate the banking activity network into those which take in deposits and fund local projects and those which play a centralised role supporting the local institutions with an infrastructure and acting as their representatives in international wholesale markets. So they do not make perfect comparators to the more integrated large commercial banks. Secondly, while German has suffered from exploring the deposits of its savings banks and other banks abroad to fund various assets, the local German economy has not suffered, so the savings and cooperative banks have not been tested at local level, not this time around anyway.cartoon120621_2_full_600x400[1]

Secondly, the Italian section is a maybe little brusque. While savings banks and cooperatives along the German model have existed since the late 19th century, it is stated that they have not really established themselves to such a large extent and have been privatised. However, some of the arguments put forward for the benefits of public savings and cooperative banks are that they maintain localism. While Italy has clearly done much to privatise and get local politics out of their banks, they still certainly maintain more local banks than say a UK or Ireland as a proportion of their banking industry. In addition, while the word “Foundations” is mentioned iceberg-montepaschi[1]once, we rather skip over the important role they play in the governance and ownership of certain Italian banks in which the Foundations play such a large role and which still own a large proportion of the bank, including and rather notably the oldest of them all, Banca Monte dei Paschi di Siena, which so obviously faces an existential crisis.

Policy and Teaching

The public savings industry which the authors really find was badly hit by financial crisis was the Spanish one. However, they make a very interesting point that the industry in Spain had already abandoned many of the seven characteristics of public savings banks the authors identified. Indeed they make the very strong case that by allowing the savings banks in Spain to become national and to expand in areas they had little experience, they were attracted to the booming area of commercial mortgages, the vast majority used to fund the property bubble which would so damage Spain when it burst.

This last point is an interesting one as it shows the consequences of changing a system of ownership and governance under pressure to reform for only one reason, in this case the European standardised view of competition. Given banks are at the heart of the monetary system, consequences elsewhere in the economy have to be considered. Until the 1970s the Spanish savings banks were public institutions and somewhat politicised. Accession to the EU in 1986 brought pressure to reform and to liberalise, and yet while elements of competition were reformed, the governance of these institutions was not improved; fiefdoms remained, spurred on by growing competition. Of course the EU is hardly to blame for house price falls of up to 53.5% in Spain, but it does emphasise the importance of working through the long term consequences of policy changes which may interact with other events.

This paper not only gives teaching staff the opportunity to expose students to other banking governance and ownership possibilities, it discusses how changes to the model once common to all public savings and cooperative banks have potentially undermined some of their advantages and led to unintended consequences. It will be in the student reading list next year for sure.

On the many failures of (southern) Italy to catch up

Regional income inequality in Italy in the long run (1871–2001). Patterns and determinants

by

Emanuele FELICE (claudioemanuele.felice@uab.cat) Departament d’Economia i d’Història Econòmica, Universitat Autònoma de Barcelona

ABSTRACT

The chapter presents up-to-date estimates of Italy’s regional GDP, with the present borders, in ten-year benchmarks from 1871 to 2001, and proposes a new interpretative hypothesis based on long-lasting socio-institutional differences. The inverted U-shape of income inequality is confirmed: rising divergence until the midtwentieth century, then convergence. However, the latter was limited to the centrenorth: Italy was divided into three parts by the time regional inequality peaked, in 1951, and appears to have been split into two halves by 2001. As a consequence of the falling back of the south, from 1871 to 2001 we record s-divergence across Italy’s regions, i.e. an increase in dispersion, and sluggish ß-convergence. Geographical factors and the market size played a minor role: against them are both the evidence that most of the differences in GDP are due to employment rather than to productivity and the observed GDP patterns of many regions. The gradual converging of regional GDPs towards two equilibria instead follows social and institutional differences – in the political and economic institutions and in the levels of human and social capital – which originated in pre-unification states and did not die (but in part even increased) in postunification Italy.

URL:  http://d.repec.org/n?u=RePEc:aub:uhewps:2013_08&r=his

Review by Anna Missiaia

This paper was distributed by NEP-HIS on 2013-12-29. The author, Emanuele Felice, engages  with the mother of all research questions in the economic history of post-Unification Italy, which is “why did the south fall behind?”. The large and widening economic gap between the north and south of Italy remains one of the “big topics” in Italian economic history and one upon which consensus is far from being reached. The paper by Felice aims at providing both new quantitative data to assess this gap and a discussion on what caused and, equally important, what did not cause the formation and persistence of the north/south divide. 

Emanuele Felice

Emanuele Felice

Let us start with the quantitative assessment. Felice provides new estimates of regional GDP at present borders. Given the long-run perspective adopted, it is necessary to make sure that we are comparing the same regions through time. This is not straightforward for Italy as it experienced several changes in its borders between 1871 and 2001. Felice collected detailed data from foreign (mostly Austrian) sources on territories that eventually become part of northern Italy. This data enables him to produce regional GDP per capita estimates for 10 year benchmarks from 1871 to 2001.

Felice then measures convergence and divergence across regions. The bottom line is that Italian regions diverged during most of the period under study. This divergence exacerbated the most between World War I (WWI) and the late 1950s. Then during the so called “Economic Miracle” of the 1960s, Italian regions experienced a degree of convergence. This convergence took place during a period of very high economic growth in the north and Felice attributed this convergence to the heavy subsidising of the southern economy. Felice also observes that while the south failed to catch up with the rich north, the northeast and centre succeeded in the task, reaching similar GDP per capita levels to those of the original Industrial Triangle towards the end of the 20th century. 

After the number crunching, Felice moves on to tackle the determinants of the income inequality. Following the path of a debate almost as old as Italy, he focuses on some well known hypothesis. The first one is that the south had a geographical disadvantage either in terms of factor endowment or market access. Felice discards the first hypothesis noting that differences between the north and south were not as marked and that the macro-areas were more different within than between them. Are a result the endowment argument is not a good candidate to explain the north-south divide. On market access, Felice notes that the south had a fairly high access to markets in the period before WWI compared to the north and the situation reversed gradually. Also, after WWI regions with a quite low access to markets (Trentino Alto-Adige and Valle d’Aosta) managed to reach high levels of GDP and regions in the south with a good access to markets performed poorly in GDP growth. 

Trentino Alto-Adig

After excluding geographical factors, Felice discusses the human element to explain divergence. He looks at human capital, social capital and institutions. At the time of unification, the south was lagging behind in both human and social capital (for a more detailed discussion and some numbers see Felice (2012)). Felice’s thesis is that economic development in the south was highly affected by its low human capital until WWII. In spite of the catch up in literacy rates after WWII, measures of social capital show that the south has never reached the level of the north. The persistence of the gap has therefore to be attributed to persistence of low levels of social capital that allowed the consolidation of poor institutional settings as well as the flourishing of organized crime.  

Reading Felice’s paper, one’s impression is that the author managed to convey several years of quantitative research into a nice narrative on how the south fell behind. He uses a mix of hard data and qualitative reasoning to guide the reader through. In particular, he takes timing of turning points (i.e in market access, state intervention or catch up in literacy rates) to explain how different elements could or could not explain the divide. He also uses the case of the northeastern regions to explain how path dependence can be overcome (the northeast had very low levels of human capital at the time of unification but managed to catch up with the rest of the north).  

For the Italian readers, Emanuele Felice, 2014, "Perche' il Sud e' rimasto indietro", Il Mulino, Bologna.

For the Italian readers, Emanuele Felice, 2014, “Perche’ il Sud e’ rimasto indietro”, Il Mulino, Bologna.

To conclude, it is often the case that this narrative argues that the south was not disadvantaged in all the factors and that different periods were driving economic growth in the country. However, it seems like it was advantaged in a given factor of growth only when that factor was not important. For example, it had a good market access before WWII, when human capital was more important; it had cough up in terms of human capital after WWII but at that time social capital started being more important. The picture that emerges from this work is that the south suffered from a mix of poor starting conditions, bad timing and unfortunate development strategies that trapped it into the gap that we still observe today.

 

References

Emanuele Felice, 2012. Regional convergence in Italy, 1891–2001: testing human and social capital, Cliometrica, Journal of Historical Economics and Econometric History, Association Française de Cliométrie (AFC), vol. 6(3), pages 267-306, October.

La Deutsche Vida

Foreign family business and capital flight. The case for a fraud to fail

By Giovanni Favero, Università Ca’ Foscari Venezia (gfavero@unive.it)

Abstract:
The research here proposed is a micro-analysis of a business ending in bankruptcy in the aftermaths of the first oil shock, concerning the Italian subsidiary of a German wareenamelling group established in the town of Bassano in 1925. Following the budget reports and the interviews with the former entrepreurs, the company flourished until the 1960s, when managerial and entrepreneurial successions emphasized the growing difficulties deriving from growing labour costs. A tentative reorganization of the company was hindered in 1968 by union resistance and political pressures for the preservation of employment levels. In 1975 the board of directors decided to declare bankruptcy as a consequence of the huge budget losses. However, a subsequent inquiry of the Italian tax authority discovered an accounting fraud concerning hidden profits in 1974 and 1975. The fraud disclosure shows how historical conditions could create the convenience for performance understatement not only for fiscal purposes, but also in order to make divestment possible. However, it is also used here as an element to argue that business sources and the story they tell should not be taken at their face value, and that a different reconstruction of the company’s path to failure is possible. The literature concerning the missed recognition of opportunities is then mobilised in order to interpret the inconsistencies that emerge from the triangulation of business archives, press columns and interviews with union representatives and politicians. This allows to put back into perspective what results as an obsession of company management with labour costs, concealing the importance of other competitive elements, such as the increasing specialisation of the producers of home appliances. This ‘refractive error’ may be typical of businesses operating in (presumed) mature industries at international level, where wage differentials offer the opportunity to pursue quite literally exploitation much further.

URL: http://econpapers.repec.org/paper/vnmwpdman/63.htm.

Reviewed by Bernardo Bátiz-Lazo

This paper was distributed by NEP-HIS on 2013-12-15 and offers an interesting combination of business and accounting history around the long-term performance of the Italian assets of an Austrian family business (named Westens). The investment relates to a enamelling plant in the town of Bassano in 1925 (called Smalteria Metallurgica Veneta or SMV, today part of BDR Thermea). The Bassano plant was one of the largest factories of glazed products (for use in electric water heaters, bathtubs and heating products like radiators). Favero’s story takes us from its origins until the Westens leave the company in 1975. Activities, however, continued and by “the end of the 1970s the company focused its production in the heating sector… In the mid-eighties the company expanded into foreign markets. “[see further here].

Air photo of original factory (Source: http://www.baxi.it/storia/)

Air photo of original factory (Source: http://www.baxi.it/storia/)

The narrative gyrates around the Bassano plant, some three generations of Westens and an equal number of internal grown talent at the helm of SMV. Favero argues that the reason behind the origins of SMV and other similar investments in Central and Easter Europe by the Westens was to overcome growing protectionism and the end of Empire. However, the number of secondary references suggests the SMV case is relevant for Italian business history and perhaps, more could have been said about this. Nevertheless, we can follow the changes in corporate governance, the attitude of the family to foreign investments, the changing relationship between national branches and SMV’s “strategy” (a term used rather loosely by the author) as the 20th century progresses. Also how the plant was established on the basis of a then unique process of enamelling, a source of competitive advantage that also erodes as time goes by. Some discussion about the role of Chandler’s “first mover advantage” within family business would have been desirable here.

It is evident that Favero has had access to a large number of source material (including oral histories and fiscal authority memoranda and investigative papers). Yet the case is rather short and this result in the narrative progressing some time in jumps rather than a smooth flow. For instance, it is only until the end that we learn why the fraud was discovered five years after the original owners declared bankruptcy. Namely the intervention of the Italian government to maintain employment kept the plant (or the company, its not clear) afloat. There is also reference to some “bad blood” between the Westens and the Italians but we are not totally sure why and when. There are indications of growing tensions with unions and Favero tries to make a case about “management’s “obsession with labour costs”. We could also benefit from learning about the inconsistencies Favero between different sources. Perhaps an idea would be to add a timeline where one side maps changes in strategy, corporate governance or in the ruling family and the other side maps changes in the environment.

However, in its present form this makes a potentially useful teaching case in a world economic history, international business or globalisation course. Favero also claims the SMV case is part of a larger project looking at Westens’ investments in different countries. I certainly look forward to future instalments.

Giovanni Favero

Giovanni Favero

Italy and the World Economy: celebrating Italy’s 150th birthday with some data crunching

The Well-Being of Italians: A Comparative Historical Approach

by Andrea Brandolini (andrea.brandolini@bancaditalia.it) and Giovanni Vecchi (giovanni.vecchi@uniroma2.it)

URL: http://d.repec.org/n?u=RePEc:bdi:workqs:qse_19&r=his

Abstract

The paper describes the evolution of the well-being of the Italians during the 150 years since the country’s unification. The progress in material standard of living was substantial, with GDP per capita growing 13 times between 1861 and 2010 and hours of work (and hence effort) falling considerably, but was roughly in line with that experienced by most other European countries. By relying on a novel database on household budgets, the paper shows that economic growth was accompanied by a long-run reduction of inequality that appears however to have been reversed in the last two decades. Progress was not limited to the economic domain: educational attainment improved considerably, although less than in other countries; on the other hand, the increase in life expectancy was spectacular and brought Italians to lead the international ranking.”

“Comparative Advantages in Italy: A Long-run Perspective”

by Giovanni Federico (giovanni.federico@eui.eu) and Nikolaus Wolf  (nikolaus.wolf@wiwi.hu-berlin.de)

URL: http://d.repec.org/n?u=RePEc:bdi:workqs:qse_9&r=his

Abstract

The history of Italy since her unification in 1861 reflects the two-way relationship between foreign trade and economic development. Its growth was accompanied by a dramatic increase in the country’s integration with European and global commodity markets: foreign trade in the long run grew on average faster than the overall economy. Behind the dynamics of aggregate trade, Italy’s comparative advantage changed fundamentally over the last 150 years. The composition of trade, in terms of both commodities imported and exported and in terms of trading partners, developed from a high concentration of a few trading partners and a handful of rather simple commodities into a wide diversification of trading partners and more sophisticated commodities. In this chapter we use a new long-term database on Italian foreign trade at a high level of disaggregation to document and analyze these changes. We will conclude with an assessment of Italy’s prospects from a historical perspective.”

Review by: Anna Missiaia

In 2011 the Bank of Italy promoted an extensive research project to celebrate the 150th anniversary of the Unification of the country. The project focused on the various aspects of the economic history of Italy since 1861. The goal was to cast light on the economic and social development of unified Italy and on Italy’s position in the world today. The project involved an impressive number of prominent scholars (mostly historians, economic historians and economists) both Italian and international.  The results of the research project were presented at the international conference held at the Bank of Italy in Rome from 12 to 15 October 2011. The project included twenty studies, most of these coauthored by Italian and non-Italian scholars (all of which were distributed by nep-his on 2011 12 19). The topics analyzed included: productivity and wealth, technology, production specialization, business internationalization, human capital, social capital, trade, migration, legal system, regional divergence, financial system and public finance, political economy. All the works presented adopt a long run perspective, embracing all the 150 years of unitary history of Italy. One of the most interesting results of this project was the revision of Italian historical statistics and the release of new historical series of the main national accounts aggregates. All the working papers presented at the conference are available from the website of the Bank of Italy.

Here we propose to comment on two contributions that were presented at the conference. The first one is “ The Well-Being of Italians: A Comparative Historical Approach” by Andrea Brandolini and Giovanni Vecchi which is concerned with measures of standard of living of the Italian population over 150 years. The second paper is “Comparative Advantages in Italy: A Long-run Perspective” by Giovanni Federico and Nikolaus Wolf which is concerned with the relationship between foreign trade and economic development in Italy.

Brandolini and Vecchi propose an overview of measures of standard of living that go beyond GDP per capita, including new estimates made available within the project. First of all, they show new estimates of income per capita recently released by Banca d’Italia, ISTAT and University of Rome Tor Vergata. They then compare these with the updated international series by Maddison. The result is that Italy lagged behind until WWII, after which the big catch up took place resulting in an overall increase by a factor of 13. The two scholars then propose a measure that takes account of the economies of scales in consumption: GDP per equivalent person. This measure takes into account of the household size, allowing to consider pooling benefits. The difference between the two series are large at the beginning of the period and shirk over time because of the reduction of household size. On worked time, third measure of well-being proposed here, they find that the number of hours worked decreased dramatically. The most interesting result is that child work decreased as well during industrialization, which is a result that makes Italy different from other industrializing countries like Belgium, the US and the UK. The next step is to look at inequality over the 150 years. For this purpose, they use the data available from the Italian Household Budget Database. As for inequality, the experience of Italy seems to be different from other countries such as the US and the UK: inequality, measured through the Gini and the Atkinson indices, decreased until the 1980s, with a resumption in the last 30 years. The last measures proposed are life expectancy, anthropometric measures and the Human Development Index (HDI). Life expectancy rose dramatically over the 150 years at a higher pace compared to that of other industrializing countries. This was due to a great improvement of health conditions. Heights appear to be negatively affected by industrialization, showing once again the difference between Italy and the others. The performance of the HDI is quite poor, mostly because of the slow increase in school enrollment rates. Concluding, the main features of the development of well-being of Italians between 1861 and today is an increase in GDP in line with that of other Western countries and a decreasing inequality and longevity/health in spite of industrialization.

The second paper reviewed here deals with assessment of the evolution of the comparative advantage of Italy in international trade. The common wisdom at the time of unification was that Italy should have focused on exporting primary rather than manufacturing goods. Federico and Wolf use a new dataset on Italian trade to show how comparative advantage of Italy changed over the 150 years. The dataset as been constructed within a project funded by Banca d’Italia and provides systematic information on Italian trade from 1862 onwards. The authors calculate comparative advantages through the index of Revealed Comparative Advantage for each type of product. Intuitively, for each of these they measure the difference between the product’s normalized net balance and the total normalized net balance. If the index is positive, there is a comparative advantage in that type of export. The result is a shift in the comparative advantage of Italy from primary goods to manufacturing around the 1920s. This result is interesting as it shows that Italy achieved this shift earlier than previously thought and it managed to reverse the expectations at the time of Unification. Federico and Wolf also comment on the change of trading partners that Italy experienced over the period, starting with a 90% of exports towards Europe and ending with a much higher degree of openness towards the rest of the world.

In conclusion, the research project promoted by the Bank of Italy for the 150th anniversary of Unification was a very fruitful opportunity for economic historians. Existing series have been revised and expanded, giving great opportunities for new research in a number of related fields. The two working papers reviewed here are only two examples of the use of these data.