Education and Italian Regional Development

In this paper, we study the connection between growth and human capital in a convergence regression for the panel of Italian regions. We include measures of average primary, secondary and tertiary education. We find that increased education seems to contribute to growth only in the South. Decomposing total schooling into its three constituent parts, we find that only primary education in the South seems to be important, while tertiary education seems to have a negative impact on regional growth. Our main results are robust to the inclusion of additional variables in the regression analysis and the use of an IV estimator. Overall, this study suggests that Italian growth benefited from the elimination of illiteracy in the South, mainly in the 60s. It also suggests a possible relationship between the level of development of an economy and returns to different levels of education, with Italian regions still far from being able to capture the positive returns from higher levels of education.