Politically connected cities: Italy 1951-1991

Barone, Guglielmo ; de Blasio, Guido ; Gentili, Elena (2020) Politically connected cities: Italy 1951-1991. Bologna: Dipartimento di Scienze economiche, p. 46. DOI 10.6092/unibo/amsacta/6595. In: Quaderni - Working Paper DSE (1158). ISSN 2282-6483.
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Abstract

The paper estimates the political connection premium for Italian cities tracked during the second half of the 1900s, when the role of the state in the economy was very widespread. It leverages the peculiar features of the gridlocked political landscape in place between the end of World War II and the fall of the Berlin wall, during which most influential politicians remained in charge for a very long time. We compare connected cities - small areas surrounding birthplaces of both prime ministers and leaders of the parties in power - with very similar, but unconnected municipalities, and find that politically connected cities gained a population premium of 8% over 40 years. When the connection ends, the difference in growth rate fades away. We document that birthplaces of powerful politicians benefited from both infrastructure investments and the location of plants by state-owned enterprises. Not surprisingly, the connection favored industrialization, raised employment and wages, but crowded out private entrepreneurship. Finally, our empirical evidence indicates that agglomeration economies in treated municipalities were not higher, thus suggesting that, if anything, place-based interventions linked to political connections have not been output-enhancing from a nationwide point of view.

Abstract
Document type
Monograph (Working Paper)
Creators
CreatorsAffiliationORCID
Barone, GuglielmoUniversity of Bologna0000-0001-5759-950X
de Blasio, GuidoBank of Italy0000-0002-2800-2038
Gentili, ElenaBank of Italy
Keywords
political connections, city growth
Subjects
ISSN
2282-6483
DOI
Deposit date
09 Feb 2021 09:56
Last modified
09 Feb 2021 09:56
URI

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