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Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms

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  • Paolo Manasse
  • Luca Stanca

Abstract

This paper presents firm-level evidence on the dynamics of the relative demand for non-manufacturing workers in Italian manufacturing during the 1990s. The analysis provides a number of interesting results. First, the rise within firms in the share of non-manual workers in both employment and hours worked (within-firm skill upgrading) is the main determinant of the increase in the relative demand for skilled workers. By contrast, demand changes associated to trade have mitigated such a rise by shifting employment away from skill-intensive firms. Second, while the relative number of hours worked by skilled workers within firms has risen, the hourly wage premium has fallen. Third, within-firm skill upgrading is strongly and significantly related to investment in computers and R&D. Fourth, we find that technical progress has raised the relative productivity of skilled workers (the skill-bias of technical progress is positive). Finally we show that the standard approach that measures annual, rather than hourly relative wages, produces a downward bias in the estimate of the skill-bias of technical progress.

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Bibliographic Info

Paper provided by IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University in its series Working Papers with number 242.

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Date of creation: 2003
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Handle: RePEc:igi:igierp:242

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Cited by:
  1. Susanna Iranzo & Fabiano Schivardi & Elisa Tosetti, 2006. "Skill dispersion and firm productivity; an analysis with employer-employee matched data," Temi di discussione (Economic working papers) 577, Bank of Italy, Economic Research and International Relations Area.
  2. Francesco Serti & Chiara Tomasi & Antonello Zanfei, 2008. "Exporters, Importers and Two-way traders: The links between internationalization, skills and wage," LEM Papers Series 2008/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.

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