Related variety and employment growth in Italy: Testing sectoral heterogeneity through pavitt's taxonomy

The present study aims to provide additional evidence for the role and importance of related variety in manufacturing in fostering employment growth among Italian provinces (nuts 3) over the period 2001-2011. The focus is on assessing the sectoral specificities by adopting Pavitt's taxonomy. Concerning potential complementarities between manufacturing industries, the results indicate that the positive influence of externalities on growth dynamics are not necessarily due to the variety among high-tech sectors. Specifically, we find that the effects on employment are influenced by related variety among specialised suppliers and scale intensive sectors, in which their success in the market is not primarily related to R&D.The findings are robust once we control for some important variables able to capture the productive structure and the innovation (trademarks) of Italian regions.