Regional Differences in Returns to Education : An Analysis of the Italian Case from 1995 to 2014

Return to education and regional differences have been amply studied in the literature, in particular by Human Capital and New Economic Geography studies. A combination of both these perspectives was not examined in the case of Italy regarding the North vs. South gap. The purpose of this thesis is to go one step further and to analyze regional differences in return to education across five macro-regions in Italy. The country’s unification is relatively recent, and this leads to expect that regional differences might be very high in magnitude. Mainly studies about Italy consider it merely from a North versus South perspective, identifying in the former the most advanced region both from an income and from an educational point of view. The regions in analysis are dividing the country into five areas that resemble its subdivision before the unification, hence the expectation to capture more insights about the difference respect to a North-South gap. The data are unbalanced panel data consisting of 8 variables, collected every second year for 20 years, for 7254 individuals, followed over time. The focus of this thesis is five regional analyses of the Mincer’s equation, one per each Italian macro-region. The results present significant differences in returns to education across regions, identifying the North-West and the South the leading ones, the North-East and the Center as in-betweens, and the Islands as lagging behind.