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Interaction between Underground Employment and Unions in Selected Italian Industries

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  • Bruno Chiarini
  • Elisabetta Marzano

Abstract

In this paper we investigate empirically the nature of the relation between underground employment and unions in Italy, focusing on certain productive sectors. The motivation for this analysis is the hypothesis of the existence of two different opposite channels through which unions affect underground employment: a macro-effect, generating shadow activities via higher wages and market rigidities; a micro-effect, entailing a negative impact of trade union power on underground employment. We consider two different measures of the bargaining power of trade unions, i.e. wages and net density. Econometric analysis of Italian data yields three main results. First, mechanisms of interaction between underground employment and unions change profoundly according to the nature of the industry. Second, the two indexes of the trade unions? bargaining power play a different role vis-à-vis the extent of underground employment. Third, there is a counter-intuitive interaction between wage and underground employment, which may be explained in an insider-outsider framework.

Suggested Citation

  • Bruno Chiarini & Elisabetta Marzano, 2009. "Interaction between Underground Employment and Unions in Selected Italian Industries," Revue économique, Presses de Sciences-Po, vol. 60(5), pages 1155-1180.
    • Handle: RePEc:cai:recosp:reco_605_1155
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    References listed on IDEAS

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    Cited by:

    1. Vlassis, Minas & Mamakis, Stefanos & Varvataki, Maria, 2019. "Taxes, social insurance contributions, and undeclared labour in unionized oligopoly," Economics Letters, Elsevier, vol. 183(C), pages 1-1.

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