A spatial decomposition of the shift-share components of labour productivity inequality in Italy

This paper explores the components of aggregate labour productivity inequality between Italian regions from 2000 to 2013. The Gini index of inequality in aggregate labour productivity is decomposed, showing the extent to which sector productivity differentials and differences in industry-mix contribute to regional productivity inequality. In addition, the contribution of the interaction between differences in industry-mix and sector productivity differentials is revealed by the decomposition. Each of these contributions to inequality is measured by considering the spatial dimension of regional inequality, since the contributions of inequality between non-neighbouring regions and inequality between neighbouring regions are separated.