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

Author

Listed:
  • Alessia Matano

    (AQR-IREA Research Group, University of Barcelona. Department of Econometrics, Statistics and Applied Economics. Av. Diagonal 690, 08034 Barcelona, Spain.)

  • Paolo Naticchioni

    (University of Roma Tre, INPS-DCSR, IZA.)

  • Francesco Vona

    (OFCE Sciences-Po and Université Côte d’Azur, SKEMA.)

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”," IREA Working Papers 201905, University of Barcelona, Research Institute of Applied Economics, revised Apr 2019.
    • Handle: RePEc:ira:wpaper:201905
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    References listed on IDEAS

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    Cited by:

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    2. Devicienti, Francesco & Fanfani, Bernardo, 2021. "Firms' Margins of Adjustment to Wage Growth: The Case of Italian Collective Bargaining," IZA Discussion Papers 14532, Institute of Labor Economics (IZA).
    3. Bernardo Fanfani & Claudio Lucifora & Daria Vigani, 2021. "Employer Association in Italy. Trends and Economic Outcomes," DISCE - Working Papers del Dipartimento di Economia e Finanza def109, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).

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    More about this item

    Keywords

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

    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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