Wage distribution and the spatial sorting of workers and firms

Spatial sorting plays an important role in accounting for disparities in average wages among locations. This paper shows that sorting also matters when addressing the relation between spatial externalities and wage distribution, i.e. across workers located at dierent percentiles of the wage distribution. Using Italian employer-employee panel data we can control for individual and firm heterogeneity as well as for unobserved individual heterogeneity by means of quantile fixed eects estimates. After controlling for the sorting of workers the spatial externality impacts dampen along the whole wage distribution and generally remain positive only in the upper tail. As for firm sorting, it becomes uniform along the wage distribution once individual fixed effects are considered. We also point out that the impact of worker sorting is not homogeneous across sectors: along the density dimension it occurs mainly in skill-intensive sectors, while along the specialization dimension it is concentrated in the unskill-intensive sectors.Spatial Externalities, Spatial Sorting, Wage Distribution, Quantile Fixed Effects

Is There Rent Sharing in Italy? Evidence from Employer-Employee Data

Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a "Lester" range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector and macroarea).Rent Sharing, Sorting, Wage, Italy

Educational mismatches in the EU: immigrants vs native

The purpose of this paper is to analyse and explain the factors contributing to the observed differences in skill mismatches (vertical and horizontal) between natives and immigrants in EU countries. Using microdata from the 2007 wave of the Adult Education Survey (AES), different probit models are specified and estimated to analyse differences in the probability of each type of skill mismatch between natives and immigrants. Yun's decomposition method is used to identify the relative contribution of characteristics and returns to explain the differences between the two groups. Findings: Immigrants are more likely to be skill mismatched than natives. The difference is much larger for vertical mismatch, wherein the difference is higher for immigrants coming from non-EU countries than for those coming from other EU countries. We find that immigrants from non-EU countries are less valued in EU labour markets than natives with similar characteristics -a result that is not observed for immigrants from EU countries. These results could be related to the limited transferability of human capital acquired in non-EU countries. Social implications: The findings suggest that specific programs to adapt immigrants' human capital acquired in the home country are required to reduce differences in the incidence of skill mismatch and better integration into EU labour markets. Originality: This research is original, because it distinguishes between horizontal and vertical mismatch -an issue that has not been considered in the literature on differences between native and immigrant workers- and due to the wide geographical scope of our analysis, which considers EU and non EU-countries

What Drives the Urban Wage Premium? Evidence along the Wage Distribution

This paper aims at disentangling the role played by different explanations on the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from lower to higher density areas in Italy, using quantile regressions and individual data. The results show that unskilled workers benefit more from a wage premium accruing over time, while skilled workers enjoy a wage premium when they migrate as well as a wage increase over time. Further, we find that for unskilled workers the wage growth over time is mainly due to human capital accumulation in line with the 'learning' hypothesis, while for skilled workers the wage growth is mainly explained by the 'coordination' hypothesis, i.e., cities enhance the probability of better matches between workers and firms

Is There Rent Sharing in Italy? Evidence from Employer-Employee Data

Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a "Lester" range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector and macroarea)

What Drives the Urban Wage Premium? Evidence along the Wage Distribution [WP]

This paper aims at disentangling the role played by different theoretical explanations in accounting for the urban wage premium along the wage distribution. We analyze the wage dynamics of migrants from low-to-high-density areas in Italy, using quantile regression and individual panel data to control for the sorting of workers. The results show that skilled workers enjoy a higher wage premium when they migrate (wage level effect), in line with the agglomeration externalities explanation, while unskilled workers benefit more from a wage premium accruing over time (wage growth effect). Further, investigating the determinants of the wage growth effect in greater depth, we find that for unskilled workers the wage growth is mainly due to human capital accumulation over time, consistently with the “learning” hypothesis, while for skilled workers it is the “coordination” hypothesis that matters

The impact of combining work with study on the labour market performance of graduates: the joint role of work intensity and job-field match

Purpose - This paper investigates the effects of working during university education on labour market outcomes of university graduates. Design/methodology/approach - Based on data from three successive cohorts of graduates from the Spanish region of Catalonia, the authors estimate the effect of having worked in different types of jobs before graduation, classified according to work intensity and the match with the field of study, on the probability of being employed, having a permanent contract or having a job that requires the specific degree four years after graduation. The authors employ a multinomial endogenous treatment model that enables controlling for self selection into pre-graduation working activities (...

The Impact of Combining Work with Study on the Labour Market Performance of Graduates: the Joint Role of Work Intensity and Job-Field Match

This paper investigates the effects of working during university education on students’ labour market performance. We jointly consider the role of work intensity and the relationship with the field of study in a framework that accounts for self-selection into different types of jobs. The empirical analysis draws on data from three successive cohorts of graduates from the Spanish region of Catalonia. Our results point out that the probability of being employed four years after graduation is significantly higher for students who have worked in jobs well-matched with their degree relative to both full-time students and students who have worked in unrelated jobs. Further, the probability of having a permanent job is generally higher for those who worked before graduation, especially in the case of jobs related to the degree. However, the likelihood of early career job-qualification match is negatively affected by pre-graduation work experiences unrelated to degree’s content

New Imported Inputs, Wages and Worker Mobility [WP]

We provide a comprehensive assessment of the effects of new imported inputs on wage dynamics, on the skill-composition of the labor force, on worker mobility, and on the efficiency of matching between firms and workers. We employ matched employer-employee data for Italy, over 1995-2007. We complement these data with information on the arrival of new imported inputs at the industry level. We find new imported inputs to have a positive effect on average wage growth at the firm level. This effect is driven by two factors: (1) an increase in the white-collar/blue-collar ratio; and (2) an increase in the average wage growth of blue-collar workers, while the wage growth of white collars is not significantly affected. The individual-level analysis reveals that the increase in the average wage of blue collars is driven by the displacement of the lowest paid workers, while continuously employed individuals are not affected. We estimate the unobserved skills of workers following Abowd et al. (1999). We find evidence that new imported inputs lead to a positive selection of higher-skilled workers, and to an improvement in positive assortative matching between firms and workers

The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages

A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increased with the increase in the share of unskilled workers employed under this contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers