Technological externalities and wages: new evidence from Italian NUTS 3 regions.

This article investigates the relationship between local wages and the internal structure of regional knowledge bases in Italy, focusing on how different types of technological variety affect workers' compensation. Using patent data from the OECD REGPAT archive and administrative wage data from the Italian National Institute of Social Security (INPS), the study distinguishes between related variety (RTV) and unrelated variety (UTV) of technological knowledge, corresponding respectively to Marshallian and Jacobs’ externalities. Empirical results, controlling for individual and firm characteristics, indicate that wages are positively and significantly associated with unrelated variety, which fosters high-impact innovation and intensifies competition for skilled labor, while related variety shows a negative or non-significant effect on wages. Instrumental variable analyses confirm the causal positive impact of unrelated technological variety on wages and reveal a negative causal effect of related variety, suggesting that technological diversification across unrelated domains is more effective in generating regional wage premia than specialization in related technological fields. The findings highlight the importance of knowledge spillovers and technological diversification in explaining cross-regional wage differentials and suggest that regional innovation policies should promote technological variety to enhance local wage growth.