IDEAS home Printed from https://ideas.repec.org/a/bla/brjirl/v57y2019i2p377-407.html
   My bibliography  Save this article

Collective Bargaining and the Evolution of Wage Inequality in Italy

Author

Listed:
  • Francesco Devicienti
  • Bernardo Fanfani
  • Agata Maida

Abstract

Italian male wage inequality has increased at a relatively fast pace from the mid‐1980s until the early 2000s, while it has been persistently flat since then. We analyse this trend, focusing on the period of most rapid growth in pay dispersion. By accounting for worker and firm fixed effects, it is shown that workers' heterogeneity has been a major determinant of increased wage inequalities, while variability in firm wage policies has declined over time. We also show that the growth in pay dispersion has entirely occurred between livelli di inquadramento, that is, job titles defined by national industry‐wide collective bargaining institutions, for which specific minimum wages apply. We conclude that the underlying market forces determining wage inequality have been largely channelled into the tight tracks set by the centralized system of industrial relations.

Suggested Citation

  • Francesco Devicienti & Bernardo Fanfani & Agata Maida, 2019. "Collective Bargaining and the Evolution of Wage Inequality in Italy," British Journal of Industrial Relations, London School of Economics, vol. 57(2), pages 377-407, June.
  • Handle: RePEc:bla:brjirl:v:57:y:2019:i:2:p:377-407
    DOI: 10.1111/bjir.12444
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/bjir.12444
    Download Restriction: no

    File URL: https://libkey.io/10.1111/bjir.12444?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Lorenzo Cappellari & Marco Leonardi, 2016. "Earnings Instability and Tenure," Scandinavian Journal of Economics, Wiley Blackwell, vol. 118(2), pages 202-234, April.
    2. Oskar Nordström Skans & Per-Anders Edin & Bertil Holmlund, 2009. "Wage Dispersion Between and Within Plants: Sweden 1985-2000," NBER Chapters, in: The Structure of Wages: An International Comparison, pages 217-260, National Bureau of Economic Research, Inc.
    3. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
    4. Giulia Faggio & Kjell G. Salvanes & John Van Reenen, 2010. "The evolution of inequality in productivity and wages: panel data evidence," Industrial and Corporate Change, Oxford University Press, vol. 19(6), pages 1919-1951, December.
    5. Paolo Naticchioni & Andrea Ricci, 2009. "Falling Educational Wage Premia in Italy," QA - Rivista dell'Associazione Rossi-Doria, Associazione Rossi Doria, issue 4, December.
    6. John M. Abowd & Robert H. Creecy & Francis Kramarz, 2002. "Computing Person and Firm Effects Using Linked Longitudinal Employer-Employee Data," Longitudinal Employer-Household Dynamics Technical Papers 2002-06, Center for Economic Studies, U.S. Census Bureau.
    7. DiNardo, John & Fortin, Nicole M & Lemieux, Thomas, 1996. "Labor Market Institutions and the Distribution of Wages, 1973-1992: A Semiparametric Approach," Econometrica, Econometric Society, vol. 64(5), pages 1001-1044, September.
    8. David Card & Francesco Devicienti & Agata Maida, 2014. "Rent-sharing, Holdup, and Wages: Evidence from Matched Panel Data," Review of Economic Studies, Oxford University Press, vol. 81(1), pages 84-111.
    9. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, April.
    10. Lorenzo Cappellari, 2004. "The Dynamics and Inequality of Italian Men’s Earnings: Long-term Changes or Transitory Fluctuations?," Journal of Human Resources, University of Wisconsin Press, vol. 39(2).
    11. Christopher Erickson & Andrea Ichino, 1995. "Wage Differentials in Italy: Market Forces, Institutions, and Inflation," NBER Chapters, in: Differences and Changes in Wage Structures, pages 265-306, National Bureau of Economic Research, Inc.
    12. Torres, Sónia & Portugal, Pedro & Addison, John T. & Guimaraes, Paulo, 2013. "The Sources of Wage Variation: A Three-Way High-Dimensional Fixed Effects Regression Model," IZA Discussion Papers 7276, Institute of Labor Economics (IZA).
    13. John M. Abowd & Francis Kramarz & David N. Margolis, 1999. "High Wage Workers and High Wage Firms," Econometrica, Econometric Society, vol. 67(2), pages 251-334, March.
    14. Christian Dustmann & Johannes Ludsteck & Uta Schönberg, 2009. "Revisiting the German Wage Structure," The Quarterly Journal of Economics, Oxford University Press, vol. 124(2), pages 843-881.
    15. Marco Manacorda, 2004. "Can the Scala Mobile Explain the Fall and Rise of Earnings Inequality in Italy? A Semiparametric Analysis, 19771993," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 585-614, July.
    16. Piero, Casadio, 2003. "Wage formation in the Italian private sector after the 1992-93 income policy agreements," MPRA Paper 29396, University Library of Munich, Germany.
    17. David Card & Ana Rute Cardoso & Patrick Kline, 2016. "Bargaining, Sorting, and the Gender Wage Gap: Quantifying the Impact of Firms on the Relative Pay of Women," The Quarterly Journal of Economics, Oxford University Press, vol. 131(2), pages 633-686.
    18. Luca Flabbi & Mario Macis & Andrea Moro & Fabiano Schivardi, 2019. "Do Female Executives Make a Difference? The Impact of Female Leadership on Gender Gaps and Firm Performance," The Economic Journal, Royal Economic Society, vol. 129(622), pages 2390-2423.
    19. Francesco Devicienti & Andrea Borgarello, 2001. "Trends in the Italian Earnings Distribution, 1985-1996," LABORatorio R. Revelli Working Papers Series 2, LABORatorio R. Revelli, Centre for Employment Studies.
    20. Christian Dustmann & Bernd Fitzenberger & Uta Sch?nberg & Alexandra Spitz-Oener, 2014. "From Sick Man of Europe to Economic Superstar: Germany's Resurgent Economy," Journal of Economic Perspectives, American Economic Association, vol. 28(1), pages 167-188, Winter.
    21. Leonardi, Marco & Pellizzari, Michele & Tabasso, Domenico, 2015. "Wage Compression within the Firm," IZA Discussion Papers 9254, Institute of Labor Economics (IZA).
    22. M. J. Andrews & L. Gill & T. Schank & R. Upward, 2008. "High wage workers and low wage firms: negative assortative matching or limited mobility bias?," Journal of the Royal Statistical Society Series A, Royal Statistical Society, vol. 171(3), pages 673-697, June.
    23. George A. Akerlof, 1982. "Labor Contracts as Partial Gift Exchange," The Quarterly Journal of Economics, Oxford University Press, vol. 97(4), pages 543-569.
    24. Carlo DELL’ARINGA & Claudio LUCIFORA & Nicola ORLANDO, 2005. "Collective Bargaining and Within-Establishment Pay Inequality in Italy," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 113(2), pages 241-265.
    25. Andrea Brandolini & Piero Cipollone & Paolo Sestito, 2001. "Earnings Dispersion, Low Pay and Household Poverty in Italy, 1977-1998," Temi di discussione (Economic working papers) 427, Bank of Italy, Economic Research and International Relations Area.
    26. Vincenzo Scoppa, 2014. "Firm Size and Wages in Italy: Evidence from Exogenous Job Displacements," Manchester School, University of Manchester, vol. 82(6), pages 677-700, December.
    27. Dell'Aringa, Carlo & Lucifora, Claudio, 1994. "Collective bargaining and relative earnings in Italy," European Journal of Political Economy, Elsevier, vol. 10(4), pages 727-747, December.
    28. Jeremy T. Fox, 2009. "Firm-Size Wage Gaps, Job Responsibility, and Hierarchical Matching," Journal of Labor Economics, University of Chicago Press, vol. 27(1), pages 83-126, January.
    29. Timothy Dunne & Lucia Foster & John Haltiwanger & Kenneth R. Troske, 2004. "Wage and Productivity Dispersion in United States Manufacturing: The Role of Computer Investment," Journal of Labor Economics, University of Chicago Press, vol. 22(2), pages 397-430, April.
    30. Burdett, Kenneth & Mortensen, Dale T, 1998. "Wage Differentials, Employer Size, and Unemployment," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 39(2), pages 257-273, May.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Christian Moser & Niklas Engbom, 2016. "Earnings Inequality and the Minimum Wage: Evidence from Brazil," 2016 Meeting Papers 72, Society for Economic Dynamics.
    2. David Card & Ana Rute Cardoso & Joerg Heining & Patrick Kline, 2018. "Firms and Labor Market Inequality: Evidence and Some Theory," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 13-70.
    3. Jorge Alvarez & Felipe Benguria & Niklas Engbom & Christian Moser, 2018. "Firms and the Decline in Earnings Inequality in Brazil," American Economic Journal: Macroeconomics, American Economic Association, vol. 10(1), pages 149-189, January.
    4. Engbom, Niklas & Moser, Christian, 2020. "Firm Pay Dynamics," MPRA Paper 98477, University Library of Munich, Germany.
    5. Erling Barth & James Davis & Richard B. Freeman, 2018. "Augmenting the Human Capital Earnings Equation with Measures of Where People Work," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 71-97.
    6. Boris Hirsch & Steffen Mueller, 2020. "Firm Wage Premia, Industrial Relations, and Rent Sharing in Germany," ILR Review, Cornell University, ILR School, vol. 73(5), pages 1119-1146, October.
    7. David Card & Jörg Heining & Patrick Kline, 2013. "Workplace Heterogeneity and the Rise of West German Wage Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 128(3), pages 967-1015.
    8. Lochner, Benjamin & Schulz, Bastian, 2020. "Firm productivity, wages, and sorting," IAB-Discussion Paper 202004, Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany].
    9. Daniel Baumgarten & Gabriel Felbermayr & Sybille Lehwald, 2020. "Dissecting Between‐Plant and Within‐Plant Wage Dispersion: Evidence from Germany," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 59(1), pages 85-122, January.
    10. Colja Schneck, 2021. "Trends in Wage Inequality in the Netherlands," De Economist, Springer, vol. 169(3), pages 253-289, August.
    11. Patrick Kline & Raffaele Saggio & Mikkel Sølvsten, 2020. "Leave‐Out Estimation of Variance Components," Econometrica, Econometric Society, vol. 88(5), pages 1859-1898, September.
    12. Devicienti, Francesco & Fanfani, Bernardo, 2021. "Firms' Margins of Adjustment to Wage Growth: The Case of Italian Collective Bargaining," IZA Discussion Papers 14532, Institute of Labor Economics (IZA).
    13. Jae Song & David J Price & Fatih Guvenen & Nicholas Bloom & Till von Wachter, 2019. "Firming Up Inequality," The Quarterly Journal of Economics, Oxford University Press, vol. 134(1), pages 1-50.
    14. Richiardi, Matteo G. & Valenzuela, Luis, 2019. "Firm Heterogeneity and the Aggregate Labour Share," MPRA Paper 94561, University Library of Munich, Germany.
    15. Rasmus Lentz & Jean Marc Robin & Suphanit Piyapromdee, 2018. "On Worker and Firm Heterogeneity in Wages and Employment Mobility: Evidence from Danish Register Data," 2018 Meeting Papers 469, Society for Economic Dynamics.
    16. Christina Håkanson & Erik Lindqvist & Jonas Vlachos, 2021. "Firms and Skills: The Evolution of Worker Sorting," Journal of Human Resources, University of Wisconsin Press, vol. 56(2), pages 512-538.
    17. Moser, Christian, 2016. "How Could Wage Inequality Within and Across Enterprises be Reduced?," MPRA Paper 95381, University Library of Munich, Germany.
    18. Fanfani, Bernardo, 2022. "Tastes for discrimination in monopsonistic labour markets," Labour Economics, Elsevier, vol. 75(C).
    19. Morchio, Iacopo & Moser, Christian, 2018. "The Gender Pay Gap: Micro Sources and Macro Consequences," MPRA Paper 99276, University Library of Munich, Germany, revised 24 Mar 2020.
    20. Katarína Borovičková & Robert Shimer, 2017. "High Wage Workers Work for High Wage Firms," NBER Working Papers 24074, National Bureau of Economic Research, Inc.

    More about this item

    JEL classification:

    • J00 - Labor and Demographic Economics - - General - - - General
    • J5 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:brjirl:v:57:y:2019:i:2:p:377-407. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/lsepsuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.