Identifying Service Market Reform Priorities in Italy

February 21, 2020

Preview Citation

Format: Chicago

Nazim Belhocine, and Daniel Garcia-Macia. Identifying Service Market Reform Priorities in Italy, (USA: International Monetary Fund, 2020) accessed September 18, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

Italy’s labor productivity in market services has declined since 2000, underperforming manufacturing and peer European countries, especially in strongly regulated sectors. A model of monopolistic competition is used to identify which service sectors would benefit more from removing entry and/or exit barriers. Using Italian firm-level data, the paper finds that sectors with high markups, such as professional services, would primarily benefit from removing entry barriers. Sectors with a large mass of unproductive firms, such as retail, would instead benefit from removing exit barriers. Policy recommendations to improve efficiency are outlined in relation to the sectoral priorities identified in the data.

Subject: Competition, Economic sectors, Financial markets, Labor, Labor productivity, Production, Productivity, Services sector, Wages

Keywords: Aggregate output, Competition, Firm entry/exit barriers, Firm level, Firm productivity, Inefficiently-subsidized firm, Labor productivity, Low-productivity firm, Markups, Production function, Productivity, Service market reform, Services sector, Startup procedure, Unproductive firm, Wages, WP

Publication Details

Pages:

35
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2020/039
Stock No:

WPIEA2020039
ISBN:

9781513529998
ISSN:

1018-5941

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