Cultural capital and income inequality across Italian regions

Historic cultural institutions are known to predict local inequality, but the moderating effect of modern cultural attitudes has not been thoroughly elucidated. Our hypothesis is that local inequality is determined by a moderating mechanism based on the balance between cultural heritage and living culture. We use a unique panel dataset for Italian regions, covering the period 2007–16, and observe that regional inequality decreases where cultural heritage interacts with a more altruistic modern living culture. A finite mixture model suggests spatial clustering of inequality, dividing Italy into three areas. This reveals cultural capital-driven frictions in the spatial redistribution of human capital.