Does related variety affect regional resilience? New evidence from Italy

Although several contributions have studied the effect of related variety on the economicperformance of firms and regions, its influence on regional resilience—thatis, regions’ capacity to adapt to external shocks—has received little attention. Thispaper contributes to this debate by analysing empirically the relationship betweenrelated variety and regional resilience at the local labour market (LLM) level inItaly. The analysis uses a standard definition of regional resilience and employs spatialeconometric techniques to analyse the role played by related variety as a shortrunshock absorber with respect to the 2008 Great Recession. The results obtainedfrom the estimation of Spatial Durbin Error Models suggest that LLMs characterisedby a higher level of related variety have shown a higher capacity to adapt to theGreat Recession with respect to the 3-year period 2010–2013. On the contrary, thereis evidence of a negligible role played by related variety as a shock absorber withrespect to the 1-year resilience period 2012–2013.