Diagnosing the Italian Disease
نویسندگان
چکیده
We try to explain why Italy’s labor productivity stopped growing in the mid-1990s. We find no evidence that this slowdown is due to trade dynamics, Italy’s inefficient governmental apparatus, or excessively protective labor regulations. By contrast, the data suggest that Italy’s slowdown was more likely caused by the failure of its firms to take full advantage of the ICT revolution. While many institutional features can account for this failure, a prominent one is the lack of meritocracy in the selection and rewarding of managers. Familyism and cronyism are the ultimate causes of the Italian disease. Bruno Pellegrino gratefully acknowledges financial support from the Price Center for Entrepreneurship at UCLA Anderson. Luigi Zingales gratefully acknowledges financial support from the Stigler Center at the University of Chicago Booth School of Business. We thank Carlo Altomonte and Tommaso Aquilante for providing us with additional data from the EFIGE dataset and useful discussions. We are grateful to Andrei Shleifer, Raffaella Sadun, Romain Wacziarg, and seminar participants at Chicago Booth, UCLA Anderson, Harvard Business School, Berkeley Haas, and Purdue for their helpful comments and feedback.
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