Our paper aims to shed light on regional multidimensional well-being inequalities in Italy. We first decompose the Theil index in its “within” and “between” components and we find that disparities in multidimensional well-being go beyond the historical GDP divide between the Centre-North and the South of Italy: “within” multidimensional well-being inequalities result to be as relevant as inequalities “between” these sub-national areas, suggesting that territorial-specific factors may be at work. Then, using a regional panel in the period 2004–2012, we analyse the relationship between multidimensional well-being disparities and regional institutional quality in terms of voice and accountability, government effectiveness, regulatory quality, rule of law, and corruption. We find that institutional quality matter in affecting regional multidimensional well-being inequalities and the effect varies heterogeneously accordingly to the level of public expenditure, institutional dimensions, and spatial spillovers. These findings indicate local policies could be better targeted to reduce gaps and increase expenditure efficiency, foremost among which are anti-corruption actions and measures to enhance the effectiveness of regulatory interventions, especially in regions which are lagging behind.
