The evolution of the earnings distribution in Italy between 1986 and 2004: evidence from the WHIP database
Over the past 20 years the Italian labour market has experienced several institutional changes and socio-demographic developments. This paper explores how such changes have affected the distribution of private not agricultural earnings using longitudinal administrative records collected in the Working Histories Italian Panel (WHIP). First, we show that the decline in average yearly earnings begun in the second half of the nineties largely reflects the shortening of employment spells; weekly earnings have remained substantially constant instead. Weekly earning have become more compressed at the lower end of the distribution and more unequal at the top end, mostly reflecting the developments of the decade 1986-95. Over the entire period, earnings growth along the distribution is primarily traceable to changes in earnings differentials by sex, age, citizenship, location rather than to the changes in employment composition.