Regional developments in 2015
Last year the cyclical recovery appeared to extend to the South of Italy too. The favourable economic performance, more marked in the Centre and North, mainly reflected growth in domestic demand and in particular consumption. Qualitative indicators measuring capital investment were positive, including in Italy’s southern regions, though with varying degrees of intensity depending on the characteristics of the investing firms. Employment rose nationwide, with the exception of the North East. Credit also showed signs of a recovery throughout Italy, following the improvement in demand, helped in turn by the relaxation of loan supply conditions by banks.
Local labour market areas and urban agglomerations
Based on census data and the maps of the local labour market areas (Sistemi locali del lavoro) – defined by Istat as the set of adjacent municipalities within which most citizens both reside and work – the chapter highlights a series of structural differences across 73 urban labour market areas and the remaining 538 non-urban areas in 2011.
Italy’s urban areas have increased their relative demographic weight over time – in the last three decades also and primarily by ‘absorbing’ entire municipalities within their sphere. Their economic importance, however, outweighs demographic considerations and they are frequently specialized in services with intensive human capital inputs, and in financial rather than industrial activities. They also tend to have a larger human capital endowment, especially owing to their capacity to attract graduates, in particular those with scientific qualifications. This magnetic effect, though practically absent in the case of large cities in the South of Italy, turns out to be crucial for aggregate growth: the urban centres with the highest initial human capital endowment are those that have recorded the most growth in successive decades.
The processes of agglomeration both influence and in turn are conditioned by the real estate market. By increasing demand for housing services, these processes affect house prices, which tend to be higher in urban areas where the advantages (and costs) associated with the spatial concentration of firms and households are greatest. In areas where housing supply services are not very reactive, in part due to geographical or regulatory constraints, this increase in prices can condition the opportunities for growth. Variations in house prices across labour market areas are above all linked to the higher premium associated with living in the centre of the largest cities, while the differences between the ‘peripheries’ of the various areas are less marked, including between those belonging to different territorial agglomerations. The extent of price variations between the centre and the periphery in each area is, moreover, differentiated according to a series of characteristics based on the economic context: the variations are greatest in the urban areas compared to the non-urban ones, with peaks in the metropolitan labour market areas (i.e. communes with a population of over 250,000 inhabitants) and in particular for Rome and Milan. The price variations are also affected by the nature of the predominant economic activities in a given labour area (they are less marked, for example, in the industrial poles, where manufacturing activities tend to be distributed widely throughout the area and there is less need to localize businesses centrally) and by the greater or lesser ease of movement in the territory (in the most crowded areas the price of proximity to the centre is highest).
