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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. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).

    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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