Economic Complexity, institutions, and income inequality: evidence from Italian regions

This thesis is part of a recent and growing literature investigating whether, and to what extent, a higher degree of economic complexity within a regional economic system is associated with higher or lower income inequality. The degree of product sophistication in a region could affect positively or negatively the occupational choice of workers, binding their available options on education, human capital development, bargaining power, and the possibility of having strong and effective unions. Using data on 21 Italian regions between 2004 and 2019, we test whether the economic complexity- inequality relationship is moderated by the quality of regional institutions. Our panel estimates show that regions where economic complexity is higher are also regions where income is less equally distributed.