IDEAS home Printed from https://ideas.repec.org/a/oup/econjl/v129y2019i624p3256-3291..html
   My bibliography  Save this article

Wage Compression within the Firm: Evidence from an Indexation Scheme

Author

Listed:
  • Marco Leonardi
  • Michele Pellizzari
  • Domenico Tabasso

Abstract

We revisit the role of labour market institutions by showing how they affect the sharing of firm-specific rents between employers and employees. We look at an Italian wage indexation mechanism (‘Scala Mobile’) that compressed the distribution of wages, imposing real wage increases at the bottom of the distribution. After developing a simplified version of a search model with intra-firm bargaining and on-the-job search, we document that skilled workers received lower wage adjustments when employed at firms with many unskilled workers and they tended to move towards more skill-intensive firms. Moreover, the system drove the least skill-intensive firms out of the market.

Suggested Citation

  • Marco Leonardi & Michele Pellizzari & Domenico Tabasso, 2019. "Wage Compression within the Firm: Evidence from an Indexation Scheme," The Economic Journal, Royal Economic Society, vol. 129(624), pages 3256-3291.
  • Handle: RePEc:oup:econjl:v:129:y:2019:i:624:p:3256-3291.
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1093/ej/uez022
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bernardo Fanfani, 2019. "The Employment Effects of Collective Bargaining," Working papers 064, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    2. Effrosyni Adamopoulou & Ernesto Villanueva, 2020. "Wage determination and the bite of collective contracts in Italy and Spain: evidence from the metal working industry," Working Papers 2036, Banco de España.
    3. Giupponi, Giulia & Machin, Stephen, 2022. "Company wage policy in a low-wage labor market," LSE Research Online Documents on Economics 117983, London School of Economics and Political Science, LSE Library.
    4. Koray Aktas, 2021. "Characterizing Life-Cycle Dynamics of Annual Days of Work, Wages, and Cross-Covariances," Working Papers 465, University of Milano-Bicocca, Department of Economics.
    5. Adamopoulou, Effrosyni & De Philippis, Marta & Sette, Enrico & Viviano, Eliana, 2020. "The Long Run Earnings Effects of a Credit Market Disruption," IZA Discussion Papers 13185, Institute of Labor Economics (IZA).
    6. Andrea Garnero, 2021. "The impact of collective bargaining on employment and wage inequality: Evidence from a new taxonomy of bargaining systems," European Journal of Industrial Relations, , vol. 27(2), pages 185-202, June.
    7. Katariina Mueller-Gastell, 2023. "Poach or Promote? Job Sorting and Gender Earnings Inequality across U.S. Industries," Working Papers 23-23, Center for Economic Studies, U.S. Census Bureau.
    8. 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).
    9. Adamopoulou, Effrosyni & Villanueva, Ernesto, 2022. "Wage determination and the bite of collective contracts in Italy and Spain," Labour Economics, Elsevier, vol. 76(C).

    More about this item

    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:oup:econjl:v:129:y:2019:i:624:p:3256-3291.. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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: Oxford University Press or the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/resssea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.