Decreasing Wage Inequality in Italy: The Role of Supply and Demand for Education
AbstractIn this paper we show that wage inequality decreased in the Italian private sector, both in the upper and in the lower tail of the distribution, in the period 1993-2006. By applying a quantile decomposition procedure we find that the decrease of the 90/50 ratio is almost totally related to a negative coefficients component. As for the reduction of the 50/10 ratio, the quantile decomposition shows that it can be related to both the negative coefficients component and the residual component. We claim that that supply-demand interactions have to be considered as the main explanation for the falling educational wage premia that represent the driving force of the falling 90/50 ratio. The reduction of the 50/10 ratio can be instead associated to the changes in the residual component -related to compositional effects-, to the changes in the occupation distribution and to changes in tax regimes.
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Bibliographic InfoPaper provided by Dipartimento di Economia, Sapienza University of Rome in its series Working Papers - Dipartimento di Economia with number 9-DEISFOL.
Length: 32 pages
Date of creation: 2009
Date of revision: 2009
Inequality; Educational Wage Premia; Quantile Decomposition; Supply-Demand of Education; Italy;
Other versions of this item:
- Paolo Naticchioni & Andrea Ricci, 2010. "Decreasing Wage Inequality in Italy: The Role of Supply and Demand for Education," Working Papers CELEG 1004, Dipartimento di Economia e Finanza, LUISS Guido Carli.
- J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
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