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Is there Rent Sharing in Italy? Evidence from Employer-Employee data

  • Alessia Matano
  • Paolo Naticchioni

    ()

    (Sapienza University of Rome, Italy.)

Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is a robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a “Lester” range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector, macroarea).

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File URL: http://phdschool-economics.dse.uniroma1.it/DSEISFOL/papers/matanonaticchioni_11_2011rent.pdf
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Paper provided by Dipartimento di Economia, Sapienza University of Rome in its series Working Papers - Dipartimento di Economia with number 11-DEISFOL.

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Length: 24 pages
Date of creation: 2011
Date of revision: 2011
Handle: RePEc:des:wpaper:21
Contact details of provider: Web page: http://dipartimento.dse.uniroma1.it/economia/

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  1. Margolis, D.N. & Salvanes, K.G., 2001. "Do Firms Really Share Rents with Their Workers?," Papers 11/2001, Norwegian School of Economics and Business Administration-.
  2. Arai, Mahmood, 1999. "Wages, Profits and Capital Intensity: Evidence from Matched Worker-Firm Data," Research Papers in Economics 1999:3, Stockholm University, Department of Economics.
  3. Hilderth, A.K. & Oswald, A.J., 1993. "Rent-Sharing and Wages: Evidence form Company and Establishment Panels," Economics Series Working Papers 99154, University of Oxford, Department of Economics.
  4. Nekby, Lena, 2002. "Gender Differences in Rent Sharing and its Implications for the Gender Wage Gap," Working Paper Series 182, Trade Union Institute for Economic Research.
  5. Pedro Martins, 2009. "Rent sharing before and after the wage bill," Applied Economics, Taylor & Francis Journals, vol. 41(17), pages 2133-2151.
  6. Card, David & Devicienti, Francesco & Maida, Agata, 2011. "Rent-Sharing, Hold-up, and Wages: Evidence from Matched Panel Data," IZA Discussion Papers 6086, Institute for the Study of Labor (IZA).
  7. Rusinek, Michael & Rycx, Francois, 2008. "Rent-Sharing under Different Bargaining Regimes: Evidence from Linked Employer-Employee Data," IZA Discussion Papers 3406, Institute for the Study of Labor (IZA).
  8. Pistoresi, Barbara & Strozzi, Chiara, 2001. "Rent Sharing in Wage Determination: Evidence from Italy," CEPR Discussion Papers 2939, C.E.P.R. Discussion Papers.
  9. Pedro S. Martins, 2007. "Rent sharing and wages," Reflets et perspectives de la vie économique, De Boeck Université, vol. 0(2), pages 23-31.
  10. Luigi Guiso & Luigi Pistaferri & Fabiano Schivardi, 2005. "Insurance within the Firm," Journal of Political Economy, University of Chicago Press, vol. 113(5), pages 1054-1087, October.
  11. 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.
  12. David Margolis & Kjell G, Salvanes, 2001. "Do Firms Really Share Rents with their Workers," Working Papers 2001-16, Centre de Recherche en Economie et Statistique.
  13. Pencavel, John & Pistaferri, Luigi & Schivardi, Fabiano, 2006. "Wages, Employment, and Capital in Capitalist and Worker-Owned Firms," IZA Discussion Papers 2188, Institute for the Study of Labor (IZA).
  14. Gürtzgen, Nicole, 2005. "Rent-Sharing and Collective Bargaining Coverage: Evidence from Linked Employer-Employee Data," ZEW Discussion Papers 05-90, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  15. David G. Blanchflower & Andrew J. Oswald & Peter Sanfey, 1992. "Wages, Profits and Rent-Sharing," NBER Working Papers 4222, National Bureau of Economic Research, Inc.
  16. Van Reenen, John, 1996. "The Creation and Capture of Rents: Wages and Innovation in a Panel of U.K. Companies," The Quarterly Journal of Economics, MIT Press, vol. 111(1), pages 195-226, February.
  17. Arai, Mahmood & Heyman, Fredrik, 2001. "Wages, Profits and Individual Unemployment Risk : Evidence from Matched Worker-Firm Data," Working Paper Series 172, Trade Union Institute for Economic Research.
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