The aim of this paper is to analyze the evolution of provincial labor productivity disparities and the convergence process among Italian provinces, over the 1995-2005 period, highlighting the importance of including spatial effects and a disaggregated analysis at the sectoral level. Nonparametric estimation are computed using spatial Markov chains (Rey, 2001). The results indicate that disparities in labor productivity between North and South of Italian provinces persist for aggregation data while for disaggregation data, at the sectoral level, persistence decreases and increases the stratification (the presence of more than two clusters).
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