Work in Progress

This paper examines the territorial drivers of social innovation in Europe, focusing on how local factors can offset limited resources. Using ESID-RISIS data, the study finds that while technological knowledge does not drive social innovation, density externalities such as local interactions and knowledge spillovers are crucial. It also shows that public funding is more effective in low-density regions, suggesting that public investment and density externalities function as substitutes in fostering social innovation.

Local development policies often try to attract both large plants and networks of small and medium–sized enterprises. This paper asks whether jobs created in plants of different sizes have different effects on local employment. Using data on establishments and personnel in Italian local labor market areas between 2012 and 2020, we compare how many additional local jobs are associated with one more job in micro, small, medium, and large plants in tradable industries. We find that jobs in small and large plants generate substantially more additional employment than jobs in micro and medium plants. This suggests that the local impact of industrial and place–based policies depends not only on how many jobs in tradable industries are created, but also on the size mix of the plants that create them.

This paper reexamines how employer competition affects productivity from a labor–market perspective. It argues that much of the empirical disagreement on the productivity– competition nexus reflects market misdefinition: standard 3–digit industry measures understate rivalry among employers that hire substitutable workers across related industries. Using cross–industry occupational similarity, the paper constructs a skills–based, relevant–market measure of competition. Drawing on Italian manufacturing firm–level data for 2012–2020, it estimates the causal effect of competition on productivity using a skill–similarity–augmented shift–share instrument. Findings indicate that a 1 percentage–point increase in relevant–market competition predicts a 0.37% increase in productivity.

When a global shock hits a national economy, places react differently. Differences in responses depend on local economic structures. This paper focuses on local input-output linkages in manufacturing and their role in responding to crises. Using Italian local labor market area data for 2006-2022 and shocks from the financial crisis and the Covid-19 pandemic, it estimates the additional effect of local IO linkages on unemployment. Results indicate that local manufacturing systems with stronger IO linkages suffer a higher increase in unemployment relative to areas with weaker IO linkages.

This paper studies how Italian local labor markets respond to external demand reallocation. Using annual data for local labor market areas (2006-2022) and a leave-one-out shift-share index based on 2007 industry shares, we estimate unemployment and allocative-efficiency effects across labor-market regimes. Regimes are identified through a threshold in trend unemployment. Positive demand shocks reduce unemployment in low-unemployment markets, mainly by lowering the stock of unemployed, while effects are close to zero or adverse in high-unemployment markets. The same asymmetry emerges for allocative efficiency, measured through the Olley-Pakes covariance term: shocks improve efficiency in low-unemployment areas and worsen it where unemployment is structurally high. The results imply that identical demand shocks have strongly heterogeneous local effects, with direct implications for place-based policy design.

This thesis focuses on how external economies influence economic performance under geographic concentration of manufacturing activities. It studies unemployment fluctuations, productivity, and employment growth; factors that facilitate external economies, such as competition and local structures; and the local labor market area as a unit of analysis. The dissertation includes three original chapters and a final policy-oriented conclusion, with specific attention to Italian manufacturing dynamics and industrial districts.