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Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy

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  • Dell'Aringa, Carlo

    ()
    (Università Cattolica del Sacro Cuore)

  • Lucifora, Claudio

    ()
    (Università Cattolica del Sacro Cuore)

  • Origo, Federica

    ()
    (University of Bergamo)

Abstract

This paper investigates regional public-private wage differentials in Italy. Following the recent wave of reforms that significantly changed wage setting and employment relations in both sectors – increasing decentralisation in collective bargaining and enforcing a "privatisation" of public sector employment contracts - we present new estimates of the public-private wage gap by geographical location. We report both 'standardised' public-private wage differentials, as well as estimates obtained using Geographically Weighted Regressions methods. We show that significant differences exist in public-private wage differentials across Italian regions, and that the latter can be partly explained by local labour market conditions affecting the private sector and only marginally the public sector. Differences in public-private wage differentials across regions are expected to determine several imbalances in terms of 'wait' unemployment and recruitment problems in the different areas.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1828.

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Length: 50 pages
Date of creation: Oct 2005
Date of revision:
Publication status: published in: Manchester School, 2007, 75 (4), 445-478
Handle: RePEc:iza:izadps:dp1828

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Keywords: J31; J45;

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References

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  1. Alberto Alesina & Stephan Danninger & Massimo Rostagno, 1999. "Redistribution Through Public Employment: The Case of Italy," NBER Working Papers 7387, National Bureau of Economic Research, Inc.
  2. Lucifora Claudio & Origo Federica, 1999. "Alla ricerca della flessibilità: un'analisi della curva dei salari in Italia," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 3-36.
  3. Lucifora, Claudio & Meurs, Dominique, 2004. "The Public Sector Pay Gap in France, Great Britain and Italy," IZA Discussion Papers 1041, Institute for the Study of Labor (IZA).
  4. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, American Economic Association, vol. 71(5), pages 896-908, December.
  5. repec:rie:review:y:1999:v:1:i:1 is not listed on IDEAS
  6. David G. Blanchflower & Andrew J. Oswald, 1995. "The Wage Curve," MIT Press Books, The MIT Press, The MIT Press, edition 1, volume 1, number 026202375x, December.
  7. Dell'Aringa Carlo & Origo Federica & Samek Lodovici Manuela, 1999. "Il mercato del lavoro nel Mezzogiorno: il ruolo del costo e della flessibilità del lavoro," L'industria, Società editrice il Mulino, Società editrice il Mulino, issue 2, pages 251-262.
  8. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
  9. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc.
  10. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  11. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 87(2), pages 160-93.
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Cited by:
  1. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, Elsevier, vol. 15(5), pages 1040-1061, October.
  2. Maczulskij, Terhi, 2013. "Employment sector and pay gaps: Genetic and environmental influences," Labour Economics, Elsevier, Elsevier, vol. 23(C), pages 89-96.
  3. Domenico Depalo & Raffaela Giordano, 2011. "The public-private pay gap: a robust quantile approach," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 824, Bank of Italy, Economic Research and International Relations Area.
  4. Maczulskij, Terhi, 2013. "Public–private sector wage differentials and the business cycle," Economic Systems, Elsevier, Elsevier, vol. 37(2), pages 284-301.
  5. Sabrina Di Addario & Eleonora Patacchini, 2005. "Wages and the City. The Italian case," Economics Series Working Papers, University of Oxford, Department of Economics 243, University of Oxford, Department of Economics.
  6. Hasnain, Zahid & Manning, Nick & Pierskalla Henryk, 2012. "Performance-related pay in the public sector : a review of theory and evidence," Policy Research Working Paper Series 6043, The World Bank.
  7. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 570, Bank of Italy, Economic Research and International Relations Area.
  8. Ammermüller, Andreas & Lucifora, Claudio & Origo, Federica & Zwick, Thomas, 2007. "Still searching for the wage curve: evidence from Germany and Italy," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 07-008, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  9. Paolo Ghinetti & Claudio Lucifora, 2008. "Public Sector Pay Gaps and Skill Levels: a Cross-Country Comparison," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 118, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.

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