This paper measures the impact of wage zones—compulsory wage differentials at the province level—on Italy's local labor markets during the 1950s. Using spatial regression techniques, it finds that for the industrial sectors covered under wage zones there was an increase in employment when one crossed the border from a high‐wage province into a low‐wage one; the effect diminished, however, as the distance from the boundary increased. The paper also illustrates that the impact on the overall (nonfarm) private sector, which includes both covered and uncovered sectors, was negligible.