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What can monopsony explain of the gender wage differential in Italy?

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  • Giovanni Sulis

Abstract

Purpose – This paper seeks to study gender wage differentials in Italy using first-order predictions of monopsony-search models. It compares empirical predictions of these models against other competing ones of wage determination in non-competitive settings. Design/methodology/approach – The paper looks at the empirical relevance of the model in terms of third degree wage discrimination among men and women by estimating the labour supply elasticity to the individual firm. It also tests the monopsony model using a “natural” experiment. Italian administrative longitudinal data from INPS are used. Findings – Women have lower elasticity of labour supply to the individual firm: employer size regressions indicate larger effects (and consequently lower elasticity) for women as predicted by the monopsony model. Using the theoretical dynamic monopsony-search model of Burdett and Mortensen, wage elasticity of separations and recruits confirm this result. Using relative men/women employment effects resulting from institutional changes in wage indexation mechanism (Scala Mobile), it is found that relative male employment responded differently in the two periods to the exogenous relative increase in the wage differential, as predicted by the monopsony model. Search frictions explain about 50 per cent of the gender differential. Research limitations/implications – No role for discrimination. Better controls for rents and union status would be needed. More rich firm data would be needed. Originality/value – The paper is one of the few attempts of testing implications of monopsony models in unionised labour markets, such as Italy, after some important reforms in wage bargaining agreements. The change in institutional agreements is an interesting test for different theories of wage determination.

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Bibliographic Info

Article provided by Emerald Group Publishing in its journal International Journal of Manpower.

Volume (Year): 32 (2011)
Issue (Month): 4 (July)
Pages: 446-470

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Handle: RePEc:eme:ijmpps:v:32:y:2011:i:4:p:446-470

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Related research

Keywords: Elasticity of labour supply; Employer size-effect; Gender wage differentials; Italy; Monopsony; Pay differentials; Scala Mobile;

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References

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  1. Hirsch, Barry & Schumacher, Edward J., 2004. "Classic Monopsony or New Monopsony? Searching for Evidence in Nursing Labor Markets," IZA Discussion Papers 1154, Institute for the Study of Labor (IZA).
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  3. Bowlus, Audra J, 1997. "A Search Interpretation of Male-Female Wage Differentials," Journal of Labor Economics, University of Chicago Press, vol. 15(4), pages 625-57, October.
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Citations

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Cited by:
  1. Vincenzo Scoppa, 2012. "Firm Size And Wages In Italy: Evidence From Exogenous Job Displacements," Working Papers 201201, Università della Calabria, Dipartimento di Economia, Statistica e Finanza (Ex Dipartimento di Economia e Statistica).
  2. I. Sulis & M. Porcu, 2008. "Assessing the Effectiveness of a Stochastic Regression Imputation Method for Ordered Categorical Data," Working Paper CRENoS 200804, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
  3. M. Pitzalis & I. Sulis & M. Porcu, 2008. "Differences of Cultural Capital among Students in Transition to University. Some First Survey Evidences," Working Paper CRENoS 200805, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.

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