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Rent Sharing in Wage Determination: Evidence from Italy

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  • Strozzi, Chiara
  • Pistoresi, Barbara

Abstract

This Paper presents a two-stage bargaining framework which reproduces the key features of the Italian bargaining system, where wage negotiations occur first at the industry and then at the firm level. The framework we propose takes into account the presence of different degrees of union bargaining power at the two levels of wage negotiations, thus generating a potential distinction between the extent of rent sharing in centralized and in decentralized collective agreements. On the basis of this distinction, the Paper focuses on the study of rent sharing in the Italian basic metal industry by analysing separately what occurs at each of the two bargaining stages. In particular, by estimating a dynamic factor model and by measuring the dynamic correlation between wage and labour productivity, we evaluate how, through the bargaining process, aggregate and idiosyncratic productivity shocks influence respectively centralized and decentralized wage negotiations. It turns out that while centralized agreements generate rent sharing, at the decentralized bargaining level union power is absent.

Suggested Citation

  • Strozzi, Chiara & Pistoresi, Barbara, 2001. "Rent Sharing in Wage Determination: Evidence from Italy," CEPR Discussion Papers 2939, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:2939
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    References listed on IDEAS

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    Cited by:

    1. Alessia Matano & Paolo Naticchioni, 2011. "Is There Rent Sharing in Italy? Evidence from Employer-Employee Data," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 265-279, December.
    2. Mirella Damiani & Jens Hölscher & Fabrizio Pompei, 2011. "Labour market inequalities and the role of institutions," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 8(2), pages 163-173, December.
    3. Ambra Poggi & Rosella Nicolini, 2016. "Labor Market Reform and Rent-sharing: A Quasi-experiment Experience," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 38(4), pages 618-631.

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    More about this item

    Keywords

    Two-stage bargaining; Rent sharing; Dynamic factor model; Dynamic correlation analysis;
    All these keywords.

    JEL classification:

    • C10 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - General
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

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