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Urban Wage Premia, Cost of Living, and Collective Bargaining

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  • Belloc, Marianna

    (Sapienza University of Rome)

  • Naticchioni, Paolo

    (Roma Tre University)

  • Vittori, Claudia

    (Sapienza University of Rome)

Abstract

In this paper, we estimate nominal and real (in temporal and spatial terms) urban wage premia (UWP) in Italy, with its economy characterized by the interplay between collective wage bargaining and spatial heterogeneity in the cost of living. Our dataset for the 2005- 2015 period includes, for workers' characteristics, unique administrative data provided by the Italian Social Security Institute and, for the local CPI computation, housing prices detailed at a fine level of spatial aggregation delivered by the Italian Revenue Agency. For employees covered by collective bargaining, we find a zero UWP in nominal terms and a negative and non-negligible UWP in real terms (-2.6% when all controls are included). To capture the role played by centralized wage settings, we consider various groups of self-employed workers, who are not covered by national labour agreements, while living in the same locations and enjoying the same amenities as employees. We find that, differently from employees, selfemployed workers enjoy a positive UWP in nominal terms, and do not suffer from urban real wage penalties. Results hold under a large array of robustness checks.

Suggested Citation

  • Belloc, Marianna & Naticchioni, Paolo & Vittori, Claudia, 2019. "Urban Wage Premia, Cost of Living, and Collective Bargaining," IZA Discussion Papers 12806, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp12806
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    Cited by:

    1. Bernardo Fanfani, 2019. "The Employment Effects of Collective Bargaining," Working papers 064, Department of Economics and Statistics (Dipartimento di Scienze Economico-Sociali e Matematico-Statistiche), University of Torino.
    2. Andrea R. Lamorgese & Elisabetta Olivieri & Marco Paccagnella, 2019. "The Wage Premium in Italian Cities," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 5(2), pages 251-279, July.
    3. Vittorio Daniele, 2022. "Produttività, salari e prezzi nelle regioni italiane," Regional Economy, , vol. 6(Q3), pages 3-14.
    4. Augusto Cerqua & Guido Pellegrini, 2020. "Labor mobility effects of a firm-level shock," Working Papers 1/20, Sapienza University of Rome, DISS.
    5. Stuart Donovan & Thomas de Graaff & Henri L. F. de Groot & Carl C. Koopmans, 2024. "Unraveling urban advantages—A meta‐analysis of agglomeration economies," Journal of Economic Surveys, Wiley Blackwell, vol. 38(1), pages 168-200, February.
    6. Tito Boeri & Andrea Ichino & Enrico Moretti & Johanna Posch, 2021. "Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces [“Regional Wage Disparities and Migration.”]," Journal of the European Economic Association, European Economic Association, vol. 19(6), pages 3249-3292.
    7. Fanfani, Bernardo, 2023. "The employment effects of collective wage bargaining," Journal of Public Economics, Elsevier, vol. 227(C).
    8. Andrea Garnero & Claudio Lucifora, 2022. "Turning a ‘Blind Eye’? Compliance with Minimum Wage Standards and Employment," Economica, London School of Economics and Political Science, vol. 89(356), pages 884-907, October.
    9. Andrea Garnero & Claudio Lucifora, 2020. "Turning A Blind Eye? Compliance To Minimum Wages And Employment," DISCE - Working Papers del Dipartimento di Economia e Finanza def085, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    10. 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).
    11. Belloc, Filippo & D’Antoni, Massimo, 2020. "The Elusive Effect of Employment Protection on Labor Turnover," Structural Change and Economic Dynamics, Elsevier, vol. 54(C), pages 11-25.
    12. Luca Bonacini & Giovanni Gallo & Sergio Scicchitano, 2021. "Working from home and income inequality: risks of a ‘new normal’ with COVID-19," Journal of Population Economics, Springer;European Society for Population Economics, vol. 34(1), pages 303-360, January.
    13. Alessia Matano, 2022. "Spatial externalities in big cities and duality of the labour market," Journal of Regional Science, Wiley Blackwell, vol. 62(2), pages 471-498, March.

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    More about this item

    Keywords

    urban wage premium; cost of living; wage setting;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R31 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Housing Supply and Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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