Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy
AbstractThis paper presents a general equilibrium model of regional unemployment dispersion based on the Mortensen and Pissarides (1999) framework. The model economy presented here has centralized institutions, such as a single central government and central unions, but regional labor markets with differences productivity. The model assumes that unions dislike wage dispersion across regions and the government dislikes population imbalance across the regions. The set up of the model is used to interpret the economic features of the Italian economy between the mid seventies and the end of the past century. By means of calibration using Italian data collected in the year 2000 the paper shows that the model economy explains the important regional dualism between the North and the South of Italy in terms of unemployment. Moreover, the model indicates that the interaction between unions and the government also generates low wage rates in the high productivity regions accompanied by low unemployment rates, even when the Northern worker is the median worker that determines the unions policies.
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Bibliographic InfoPaper provided by Ryerson University, Department of Economics in its series Working Papers with number 007.
Length: 42 pages
Date of creation: Nov 2009
Date of revision:
Italy; Regional Dualism; Mezzogiorno.;
Other versions of this item:
- Caponi, Vincenzo, 2008. "Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy," IZA Discussion Papers 3592, Institute for the Study of Labor (IZA).
- E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution
- J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-14 (All new papers)
- NEP-GEO-2009-11-14 (Economic Geography)
- NEP-LAB-2009-11-14 (Labour Economics)
- NEP-URE-2009-11-14 (Urban & Real Estate Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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