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“The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages”

Author

Listed:
  • Alessia Matano

    () (AQR-IREA, University of Barcelona)

  • Paolo Naticchioni

    () (AQR-IREA, University of Barcelona)

  • Francesco Vona

    () (AQR-IREA, University of Barcelona)

Abstract

A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the 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 increased with the increase in the share of unskilled workers employed under this contract. This negative institutional effect contrasts with a nonsignificant 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, 2019. "“The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages”," AQR Working Papers 201904, University of Barcelona, Regional Quantitative Analysis Group, revised Apr 2019.
  • Handle: RePEc:aqr:wpaper:201904
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    References listed on IDEAS

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    More about this item

    Keywords

    bargained minimum wages; import competition; labor market institutions; skills JEL classification: J50; F16; J31; J24;

    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
    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs

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