• Human Capital
• Italian Provinces
• Provincial Total Factor Productivity
• Wage Inequality

This research has the aim to analyse the inequality of wages and productivity across the Italian provinces. This analysis is implemented on the ISTAT's "Rilevazione sulle Forze di Lavoro" quarterly cross-sectional public data, in a temporal space that goes from I quarter of 2014 to IV quarter of 2016, which has been divided into four periods.

The research follows a two step procedure already known and used in literature, in which at the first stage the focus of the analysis is on the relationship between the individual wage and the individual observed characteristics, the province of workplace, the industrial sector in which the individual works and a dummy variable that controls whether the individual moved her domicile because of the current job. In the second step, we try to describe the relationship between the Estimated Provincial Total Factor Productivity from the first step
and provincial characteristics such as population, employment density, land area, administrative fragmentation, market potential, human capital and province's industrial composition.

The main results from the first step concern, as expected, the positive and concave impact of the experience, the positive return on education and a positive impact on wage due to a change in the domicile.

The Estimated Provincial Total Factor Productivity shows persistence in its differentials during the four periods, with an increasing gap between the top and the bottom of the productivity distribution.
The analysis on the determinants of Estimated Provincial Total Factor Productivity indicates positive impacts of population, land area, market potential, administrative fragmentation. While we found a negative impact of human capital inequality measured by Gini Index, meaning that greater inequality within the provincial human capital decreases the provincial productivity. Finally the Herfindahl Index on industrial composition shows a negative coefficient, which means a negative impact on productivity due to the higher sectoral concentration.
These results are slightly different from those founded in literature for Italy. The possible causes might be the use of different databases and different periods of analysis and the different methodology followed.

According to our results, we are in presence of a spatial inequality among Italian provinces' Total Factor Productivity and we believe that it is due to differences in population, administrative fragmentation and market potential. Human Capital is another important factor that plays a very important role in provincial productivity differentials.