Italy was unified in 1861. As part of the process of nation-building, a mandatory free-of-charge primary school system was established. Whereas the new school system greatly contributed to the modernization of the country, its initial design did not considerably reduce regional disparities in human capital, with Southern regions lagging behind. The paper studies the effects of the heterogeneous territorial diffusion of literacy during the post-unification period (1871–1911) on economic outcomes of Italian provinces 100 years later. We exploit the exogenous variations in the territorial spread in literacy rates arising from the gradual building and expansion of the railway network across provinces. We find evidence that provinces with a higher territorial diffusion of literacy in the post-unification period today have higher income per capita, lower unemployment and greater educational attainment.
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