Revisiting the growth–inequality nexus in Italian regions: inter-regional inequality and regional traps

This study aims to investigate the relationship between regional economic growth and inter-regional inequality (measured using a multidimensional Euclidean Norm Index (ENI)) across Italian NUTS2 regions from 2000 to 2022. To capture structural differences across regions, regions were classified as predominantly urban, intermediate, or predominantly rural following the OECD typology. Based on the mean values of regional economic growth and inter-regional inequality, the analysis identifies four regional regimes highlighting persistent spatial disparities between Northern, Central, and Southern Italy. Results of cluster analysis suggest territorial divide among regions, with less developed regions combining higher inequality and weaker growth, while more developed regions show the opposite pattern. Moreover, bidirectional relationship between economic growth and inter-regional inequality are identified through panel regression results. Results of regional typology suggest that urban and intermediate regions show lower inequality and faster growth than rural areas. However, the interaction of regional typology with growth indicate that the inequality-reducing impact of growth weakens in more developed regions, suggesting that growth benefits are less evenly shared. The findings suggest that targeted and place-based regional policies is the need of the time to promote balanced development and mitigate long-term territorial divides.