Identifying Service Market Reform Priorities in Italy

Author/Editor:

Nazim Belhocine ; Daniel Garcia-Macia

Publication Date:

February 21, 2020

Electronic Access:

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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.

Series:

Working Paper No. 20/39

Subject:

English

Publication Date:

February 21, 2020

ISBN/ISSN:

9781513529998/1018-5941

Stock No:

WPIEA2020039

Format:

Paper

Pages:

35

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