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The prevalence of shirking within a large Italian bank appears to be characterized by significant regional differentials. In particular, absenteeism and misconduct episodes are substantially more prevalent in the south. We consider a number of potential explanations for this fact: different individual backgrounds; group-interaction effects; sorting of workers across regions; differences in local attributes; different hiring policies; and discrimination against southern workers. Our analysis suggests that individual backgrounds, group-interaction effects, and sorting effects contribute to explaining the north-south shirking differential. None of the other explanations appears to be of first-order importance. I. INTRODUCTION Whether individual behavior is determined by group interac- tions or by individual background is undoubtedly a fundamental question for the social sciences. This question presented itself forcefully when we stumbled onto the following piece of evidence: there appear to be significant regional differentials in the preva- lence of shirking among the employees of a large Italian bank. In particular, absenteeism and misconduct episodes are considerably more frequent in the southern branches of the bank. In this paper we examine several potential explanations for this fact. First, individual preferences for shirking versus working may differ according to one's region of hirth. We will refer to this hj^othesis as one of different "individual hackgrounds." The second possibility is one of locational sorting: low-shirking types may tend to migrate to the north, high-shirking types may tend to migrate to the south, or hoth. Third, the northern and southern

Work Environment and Individual Background: Explaining Regional Shirking Differentials in a Large Italian Firm*