Submitted by Livia Harriman on Wed, 23/06/2021 - 14:24
This year's talk was given by Professor Lucio Baccaro of the Max Planck Institute for the Study of Societies
Professor Lucio Baccaro will look at three ongoing research projects. The first has to do with Italy's economic stagnation of the past twenty-five years (Baccaro and D'Antoni 2020). It is argued that Italy's decision to "tie its hands" to the euro has contributed to its economic stagnation, leading to both compression of aggregate demand and counterproductive supply-side policies (especially re-privatization and labour market reform).
The second project asks why despite the economic failure, there is still support for the euro in Italy (Baccaro, Bremer and Neimanns 2021a). Original survey data show that support has a very clear class gradient: the lower classes (measured through perceived economic status or occupational status or income) are much more likely to prefer exit to remain. The core basis of support for the euro is concentrated among the better off and pensioners, and among voters of the mainstream left. However, a survey experiment shows that Italians are especially sensitive to the costs of austerity, and there are real risks of a popular backlash against the euro in case of a financial crisis (which is made more likely by absence of growth and staggering public debt).
The third project asks what are the consequences for the eurozone if a systemically important country like Italy threatens to exit (Baccaro, Bremer, and Neimanns 2021b). A novel survey experiment in Italy and Germany suggests that faced with a credible threat of losing the euro, German voters become (narrowly) willing to support fiscal risk-sharing (e.g. Eurobonds), differently from the first phase of the euro crisis. Importantly, Germans and Italians assess the risks of a break-up of the eurozone very differently, with Italians much more likely to discount its costs. Qualitative evidence suggests that German politicians specifically sought to improve public perception in Italy and other southern countries by supporting "coronabonds".
The eurozone stands or falls with Italy. The economic consequences of Covid-19 threaten to worsen its economic crisis, pushing it closer to exit. But they also create opportunities for fundamental reform of the euro. However, such reform will have to be much more radical than what has been achieved so far. The Recovery and Resilience Facility alone is unlikely to stabilize the eurozone.
Lucio Baccaro, a citizen of both Italy and Switzerland, was born and raised in Italy and began his scholarly career with a degree in philosophy from the University of Rome. He went on to study business administration and political science with stays at top academic locations. He was awarded a doctorate in labour law and industrial relations from the University of Pavia in Italy in 1997 and a PhD in management and political science from the Massachusetts Institute of Technology (MIT) in 1999. Following further research stays at MIT and the International Labour Organization (ILO), he was appointed in 2009 to a professorship in sociology at the University of Geneva in Switzerland. In 2017, the Max Planck Society appointed him as Scientific Member and Director at the Max Planck Institute for the Study of Societies in Cologne.