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Collective Bargaining and the Wage Structure

Author

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  • Lorenzo Cappellari

    (Università Cattolica del Sacro Cuore
    Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore)

  • Bernardo Fanfani

Abstract

We study how updates in pay floors set by collective bargaining agreements (CBAs) shape the wage structure in Italy. We estimate stacked event-panel difference-indifferences models around changes of contractual minima and trace distributional impacts. Pay-floor hikes of 2.2% on average raise mean log FTE daily wages by 2.2%, but effects are near zero at the 10th percentile and stronger at the 90th, implying inequalityenhancing wage-rate responses. This asymmetry reflects both within-agreement heterogeneity, as lower-paid workers within CBAs respond less, and between-agreement heterogeneity, as low-wage CBAs exhibit weaker pass-through. Non-compliance with pay floors is higher in low-wage CBAs, thus it is a potential driver of asymmetries even if its level is not affected by wage updates. Pay-floor hikes reduce employment and days worked only among low-wage workers and only among full-time jobs, which may further contribute to the muted wage response in the lower tail through selection mechanisms.

Suggested Citation

  • Lorenzo Cappellari & Bernardo Fanfani, 2026. "Collective Bargaining and the Wage Structure," DISCE - Working Papers del Dipartimento di Economia e Finanza def155, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    • Handle: RePEc:ctc:serie1:def155
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects

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