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The impact of local minimum wages on employment: evidence from Italy in the 1950s

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  • Guido de Blasio

    ()
    (Bank of Italy)

  • Samuele Poy

    ()
    (FBK-IRVAPP)

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    Abstract

    This paper measures the impact of wage zones – minimum wage differentials at the province level – on Italy's local labor markets during the 1950s. Using a spatial regression discontinuity design, 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 (non-farm) private sector, which includes both covered and uncovered sectors, was basically zero. On balance, the scheme generated some reallocation of economic activity, albeit confined to areas close to the province border.

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    File URL: http://www.bancaditalia.it/pubblicazioni/econo/temidi/td14/td953_14/en_td953/en_tema_953.pdf
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    Bibliographic Info

    Paper provided by Bank of Italy, Economic Research and International Relations Area in its series Temi di discussione (Economic working papers) with number 953.

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    Date of creation: Mar 2014
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    Handle: RePEc:bdi:wptemi:td_953_14

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    Web page: http://www.bancaditalia.it
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    Keywords: minimum wages; regional economic activity; regression discontinuity;

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