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Rent Sharing in Wage Determination: Evidence from Italy

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  • Pistoresi, Barbara
  • Strozzi, Chiara

Abstract

This Paper presents a two-stage bargaining framework which reproduces the key features of the Italian bargaining system, where wage negotiations occur first at the industry and then at the firm level. The framework we propose takes into account the presence of different degrees of union bargaining power at the two levels of wage negotiations, thus generating a potential distinction between the extent of rent sharing in centralized and in decentralized collective agreements. On the basis of this distinction, the Paper focuses on the study of rent sharing in the Italian basic metal industry by analysing separately what occurs at each of the two bargaining stages. In particular, by estimating a dynamic factor model and by measuring the dynamic correlation between wage and labour productivity, we evaluate how, through the bargaining process, aggregate and idiosyncratic productivity shocks influence respectively centralized and decentralized wage negotiations. It turns out that while centralized agreements generate rent sharing, at the decentralized bargaining level union power is absent.

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Bibliographic Info

Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2939.

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Date of creation: Sep 2001
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Handle: RePEc:cpr:ceprdp:2939

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Related research

Keywords: dynamic correlation analysis; dynamic factor model; rent sharing; two-stage bargaining;

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References

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Cited by:
  1. Alessia Matano & Paolo Naticchioni, 2011. "Is There Rent Sharing in Italy? Evidence from Employer-Employee Data," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 265-279, December.
  2. Mirella Damiani & Jens Hölscher & Fabrizio Pompei, 2011. "Labour market inequalities and the role of institutions," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 163-173, December.

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