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The institutional wage adjustment to import competition: evidence from the Italian collective bargaining system

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  • Alessia Matano
  • Paolo Naticchioni
  • Francesco Vona

Abstract

A growing body of research has contributed to understanding the labour market and political effects of globalization. This article explores an overlooked feature of trade-induced adjustments in the labour market: the institutional aspect. We take advantage of the Italian collectively bargained minimum wage system, which is based on a two-tier structure, whereby the first tier entails setting minimum wages at the national contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995–2003 period that, on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increases in the share of unskilled workers employed in the contract. This negative institutional effect contrasts with a non-significant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers.

Suggested Citation

  • Alessia Matano & Paolo Naticchioni & Francesco Vona, 2023. "The institutional wage adjustment to import competition: evidence from the Italian collective bargaining system," Oxford Economic Papers, Oxford University Press, vol. 75(3), pages 631-651.
    • Handle: RePEc:oup:oxecpp:v:75:y:2023:i:3:p:631-651.
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    File URL: http://hdl.handle.net/10.1093/oep/gpac033
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    Cited by:

    1. Alessia Matano & Paolo Naticchioni, 2025. "China's Import Competition, Innovation Strategies, and the Role of Unions," IREA Working Papers 202502, University of Barcelona, Research Institute of Applied Economics.
    2. Bernardo Fanfani & Claudio Lucifora & Daria Vigani, 2024. "Employer associations in Italy: Trends and economic outcomes," British Journal of Industrial Relations, London School of Economics, vol. 62(2), pages 206-232, June.
    3. Matano, Alessia & Naticchioni, Paolo, 2025. "China’s Import Competition, Innovation and the Role of Unions," IZA Discussion Papers 17764, Institute of Labor Economics (IZA).
    4. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).
    5. Matano, Alessia & Naticchioni, Paolo, 2025. "China's import competition, innovation strategies, and the role of unions," Structural Change and Economic Dynamics, Elsevier, vol. 73(C), pages 423-433.

    More about this item

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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