The Italian Regional Dualism: A MARS and Panel Data Analysis

The income gap between the richest and the poorest areas in Italy has increased in the last decades. We study the sources of regional wealth that can explain the differences in income and compare rich and poor areas to provide suggestions on how to bridge the gap. A multivariate adaptive regression splines (MARS) analysis is used to detect the relevant GDP determinants, and a fixed effects model is used to investigate the regional characteristics. The effects of the 2007 crisis are evident in all regions, and some structural weaknesses in the less wealthy areas limit the opportunities to exit the recession and close many socioeconomic gaps with the wealthiest regions.