Abstract. The paper goes beyond the core-periphery divide between EU countries to consider the socio-economic divisions within the core and the peripheral countries. Building on our recent work[1], we look specifically at the relation between income distribution and imports as an example of how social and economic developments retro-acted on the core-periphery relations. First, we focus on the formation, in Germany, of a dualistic labour market. The increasing proportion of temporary, part-time and underpaid workers (working poor) led to a fall in workers’ incomes, constrained spending on consumption goods, limiting import of such goods, with the result of boosting Germany’s balance of trade surplus. The reduction in the value of imports also involved a fall in the quality of the goods acquired abroad, reflected in the prices. We argue that this “flight from quality” is by no means insignificant, for it implies substantial changes in the geographical composition of German imports, entailing a displacement of Southern European countries’ exports to Germany. Thus, the internal vicissitudes of employment, wage and income conditions in Germany had important repercussions on the rest of the Eurozone not solely through the effects of wage restraint on export competitiveness, but also through the connections between falling real incomes, the quality of imports and their geographical composition. Second, we explore the evolution of economic and social conditions in Southern European Periphery (SP). As in Germany, the SP’s labour markets went through a process of profound segmentation, starting well before the crisis. Unlike Germany, however, the casualization of the labour market occurred within a generalized worsening of economic and social conditions that accelerated as from 2008, with rising unemployment rates, mounting income inequality and poverty. This is particularly true of countries like Greece and Portugal, where the consequences of the 2008 crisis were most severe. The increasing fragmentation of the periphery corresponds to a worsening of the regional divide within each single country. In the final part of the paper, we focus on the North-South divide in Italy. We show how the European integration process and, in particular, the abandonment of industrial policies in favour of a market-oriented agenda has exerted their more damaging effects on the least developed regions of the South, contributing to increasing also internal (within-country) socio-economic disparities.

[1] Celi, G., Ginzburg, A., Guarascio, D. and Simonazzi, A. (2018), Crisis in the European Monetary Union. A core-Periphery Perspective, Routledge, London