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Is there Rent Sharing in Italy? Evidence from Employer-Employee data

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  • Alessia Matano
  • Paolo Naticchioni

    ()
    (Sapienza University of Rome, Italy.)

Abstract

Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is a robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a “Lester” range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector, macroarea).

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File URL: http://phdschool-economics.dse.uniroma1.it/DSEISFOL/papers/matanonaticchioni_11_2011rent.pdf
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Bibliographic Info

Paper provided by Dipartimento di Economia, Sapienza University of Rome in its series Working Papers - Dipartimento di Economia with number 11-DEISFOL.

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Length: 24 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:des:wpaper:21

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Web page: http://dipartimento.dse.uniroma1.it/economia/
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Keywords: Rent Sharing; Sorting; Wage; Italy;

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References

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  1. Card, David & Devicienti, Francesco & Maida, Agata, 2011. "Rent-Sharing, Hold-up, and Wages: Evidence from Matched Panel Data," IZA Discussion Papers 6086, Institute for the Study of Labor (IZA).
  2. Pedro S. Martins, 2008. "Rent Sharing Before and After the Wage Bill," Working Papers 12, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
  3. John Pencavel & Luigi Pistaferri & Fabiano Schivardi, 2006. "Wages, employment, and capital in capitalist and worker-owned firms," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(1), pages 23-44, October.
  4. Van Reenen, John, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U.K. Companies," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 195-226, February.
  5. Margolis, David N. & Salvanes, Kjell G., 2001. "Do Firms Really Share Rents with Their Workers?," IZA Discussion Papers 330, Institute for the Study of Labor (IZA).
  6. Hildreth, Andrew K G & Oswald, Andrew J, 1997. "Rent-Sharing and Wages: Evidence from Company and Establishment Panels," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 318-37, April.
  7. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1992. "Wages, Profits and Rent-Sharing," NBER Working Papers 4222, National Bureau of Economic Research, Inc.
  8. Michael Rusinek & François Rycx, 2009. "Rent-sharing under Different Bargaining Regimes: Evidence from Linked Employer-Employee Data," Working Papers CEB 09-004.RS, ULB -- Universite Libre de Bruxelles.
  9. Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2002. "Insurance within the firm," 10th International Conference on Panel Data, Berlin, July 5-6, 2002 C3-1, International Conferences on Panel Data.
  10. Nekby, Lena, 2002. "Gender Differences in Rent Sharing and its Implications for the Gender Wage Gap," Working Paper Series 182, Trade Union Institute for Economic Research.
  11. Pistoresi, Barbara & Strozzi, Chiara, 2001. "Rent Sharing in Wage Determination: Evidence from Italy," CEPR Discussion Papers 2939, C.E.P.R. Discussion Papers.
  12. David Margolis & Kjell G, Salvanes, 2001. "Do Firms Really Share Rents with their Workers," Working Papers 2001-16, Centre de Recherche en Economie et Statistique.
  13. Mahmood Arai, 2003. "Wages, Profits, and Capital Intensity: Evidence from Matched Worker-Firm Data," Journal of Labor Economics, University of Chicago Press, vol. 21(3), pages 593-618, July.
  14. Alessia Matano & Paolo Naticchioni, 2011. "Is there Rent Sharing in Italy? Evidence from Employer-Employee data," Working Papers - Dipartimento di Economia 11-DEISFOL, Dipartimento di Economia, Sapienza University of Rome, revised 2011.
  15. Pedro S. Martins, 2007. "Rent sharing and wages," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 23-31.
  16. Arai, Mahmood & Heyman, Fredrik, 2001. "Wages, Profits and Individual Unemployment Risk : Evidence from Matched Worker-Firm Data," Working Paper Series 172, Trade Union Institute for Economic Research.
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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.

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