Collective Bargaining and the Evolution of Wage Inequality in Italy

Italian male wage inequality has increased at a relatively fast pace from the mid-1980s until the early 2000s, while it has been persistently flat since then. We analyse this trend, focusing on the period of most rapid growth in pay dispersion. By accounting for worker and firm fixed effects, it is shown that workers' heterogeneity has been a major determinant of increased wage inequalities, while variability in firm wage policies has declined over time. We also show that the growth in pay dispersion has entirely occurred between livelli di inquadramento, that is, job titles defined by national industry-wide collective bargaining institutions, for which specific minimum wages apply. We conclude that the underlying market forces determining wage inequality have been largely channelled into the tight tracks set by the centralized system of industrial relations

Rent-sharing, holdup, and wages : evidence from matched panel data

When wage contracts are relatively short-lived, rent sharing may reduce the incentives for investment since some of the returns to sunk capital are captured by workers. In this paper we use a matched worker-firm data set from the Veneto region of Italy that combines Social Security earnings records for employees with detailed financial information for employers to measure the degree of rent sharing and test for holdup. We estimate wage models with job match effects, allowing us to control for any permanent differences in productivity across workers, firms, and job matches. We also compare OLS and instrumental variables specifications that use sales of firms in other regions of the country to instrument value-added per worker. We find strong evidence of rent-sharing, with a \u201cLester range\u201d of variation in wages between profitable and unprofitable firms of around 10%. On the other hand we find little evidence that bargaining lowers the return to investment. Instead, firm-level bargaining in Veneto appears to split the rents after deducting the full cost of capital. Our findings are consistent with a dynamic bargaining model (Crawford, 1988) in which workers pay up front for the returns to sunk capital they will capture in later period

La determinazione dei salari in Italia : rigidità reali e nominali prima e dopo gli accordi di politica dei redditi

This paper estimates the extent of downward wage rigidity in Italy using a micro-econometric model and the recently released WHIP longitudinal data. The econometric approach distinguishes between downward nominal wage rigidity \u2013 i.e., the impediment to nominal wage cuts \u2013 and downward real wage rigidity \u2013 i.e., when nominal wages cannot grow by less than a minimum positive threshold. The model accounts for measurement error and flexibly specifies the counterfactual, rigidity-free wage change distribution. The period analyzed goes from the mid eighties to the end of the century, within which the 1992-1993 income agreements \u2013 with the abolition of the scala mobile \u2013 are situated. Overall, downward wage rigidity impacts on about 70% of the observations. However, in the periods following the income agreements, the impact of wage rigidity is reduced, in particular with regards to real rigidities (with a slight increase in nominal rigidities). In each sub-period, however, real rigidities prevail over nominal rigiditie

Rent sharing, hold-up and wages : evidence from matched panel data

When wage contracts are relatively short-lived, rent sharing may reduce the incentives for investment since some of the returns to sunk capital are captured by workers. In this paper we use a matched worker-firm data set from the Veneto region of Italy that combines Social Security earnings records for employees with detailed financial information for employers to measure the degree of rent sharing and test for holdup. We estimate wage models with job match effects, allowing us to control for any permanent differences in productivity across workers, firms, and job matches. We also compare OLS and instrumental variables specifications that use sales of firms in other regions of the country to instrument value-added per worker. We find strong evidence of rent-sharing, with a \u201cLester range\u201d of variation in wages between profitable and unprofitable firms of around 10%. On the other hand we find little evidence that bargaining lowers the return to investment. Instead, firm-level bargaining in Veneto appears to split the rents after deducting the full cost of capital. Our findings are consistent with a dynamic bargaining model (Crawford, 1988) in which workers pay up front for the returns to sunk capital they will capture in later period

Retirement rigidities and the gap between effective and desired labour supply by older workers

Our paper analyses the observed and desired labour supply of older workers and (recent) retirees in a country (Italy) with limited opportunities for exible work schedules. For this purpose, we use a unique dataset drawn from the Bank of Italy's Survey on Household Income and Wealth (SHIW) providing information on both desired and actual working hours. Our empirical analysis documents the gap between older individuals' desired and observed labour supply at both the extensive and the intensive margins and traces it back to gender, education and family composition. The paper provides useful insights into the potential effectiveness of policies such as gradual retirement and part-time work in increasing older workers' employment