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Public Sector Pay And Regional Competitiveness. A First Look At Regional Public-Private Wage Differentials In Italy




In this paper we investigate 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 decentralization in collective bargaining and enforcing a 'privatization' of public sector employment contracts-we present new estimates of the public-private wage gap by geographical location. We report both 'standardized' public-private wage differentials and estimates obtained using geographically weighted regression 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. Copyright © 2007 The Authors; Journal compilation © 2007 Blackwell Publishing Ltd and The University of Manchester.

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  • Carlo Dell'Aringa & Claudio Lucifora & Federica Origo, 2007. "Public Sector Pay And Regional Competitiveness. A First Look At Regional Public-Private Wage Differentials In Italy," Manchester School, University of Manchester, vol. 75(4), pages 445-478, July.
  • Handle: RePEc:bla:manchs:v:75:y:2007:i:4:p:445-478

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    References listed on IDEAS

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    3. Ammermüller, Andreas & Lucifora, Claudio & Origo, Federica & Zwick, Thomas, 2007. "Still searching for the wage curve: evidence from Germany and Italy," ZEW Discussion Papers 07-008, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    4. Gabriele Cardullo, 2017. "The Welfare and Employment Effects of Centralized Public Sector Wage Bargaining," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 490-510, April.
    5. Vincenzo Caponi, 2017. "The effects of public sector employment on the economy," IZA World of Labor, Institute for the Study of Labor (IZA), pages 332-332, January.
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    7. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers) 570, Bank of Italy, Economic Research and International Relations Area.
    8. Domenico Depalo & Raffaella Giordano, 2011. "The public-private pay gap: a robust quantile approach," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 70(1), pages 25-64, January.
    9. Sharunina, A., 2016. "Where Do Public Workers Live Well? Public-Private Wage Gaps in Russia's Regions," Journal of the New Economic Association, New Economic Association, vol. 30(2), pages 105-128.
    10. Paolo Ghinetti & Claudio Lucifora, 2008. "Public Sector Pay Gaps and Skill Levels: a Cross-Country Comparison," Working Papers 118, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
    11. Kostas Mavromaras & Stephane Mahuteau & Kostas Mavromaras & Sue Richardson & Rong Zhu, 2017. "Public–Private Sector Wage Differentials in Australia," The Economic Record, The Economic Society of Australia, vol. 93, pages 105-121, June.
    12. 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.
    13. Gabriela Grotkowska, 2016. "Regional variation in the public sector wage premium in Poland," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 46.
    14. Maczulskij, Terhi, 2013. "Employment sector and pay gaps: Genetic and environmental influences," Labour Economics, Elsevier, vol. 23(C), pages 89-96.
    15. Caponi, Vincenzo, 2017. "Public employment policies and regional unemployment differences," Regional Science and Urban Economics, Elsevier, vol. 63(C), pages 1-12.
    16. Maczulskij, Terhi, 2013. "Public–private sector wage differentials and the business cycle," Economic Systems, Elsevier, vol. 37(2), pages 284-301.
    17. Sabrina Di Addario & Eleonora Patacchini, 2005. "Wages and the City. The Italian case," Economics Series Working Papers 243, University of Oxford, Department of Economics.
    18. Di Addario, Sabrina & Patacchini, Eleonora, 2008. "Wages and the City. Evidence from Italy," Labour Economics, Elsevier, vol. 15(5), pages 1040-1061, October.
    19. Gabriele Cardullo, 2012. "Public Sector Wage Bargaining, Unemployment, and Inequality," DEP - series of economic working papers 2/2012, University of Genoa, Research Doctorate in Public Economics.

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials


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