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The Effects of Unions on Wage Inequality: The Italian Case in the 1990s

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  • Checchi, Daniele

    () (University of Milan)

  • Pagani, Laura

    () (University of Milan Bicocca)

Abstract

In this paper we analyse the contribution of union activity to reducing earnings inequality. Given the specific nature of the system of industrial relations, Italian unions may contribute to inequality reduction through either national bargaining (i.e. reducing between-sector differentials) and/or local bargaining (i.e. reducing within-establishment inequality). After reviewing aggregate evidence on the first dimension, we explore the second route making use of matched employer-employees data-set, surveyed in 1995 by Eurostat. We pay great care to the potential endogeneity of local bargaining, and we find that the widespread adoption of local bargaining, by reducing the implicit price of individual characteristics, effectively contributes to inequality reduction.

Suggested Citation

  • Checchi, Daniele & Pagani, Laura, 2004. "The Effects of Unions on Wage Inequality: The Italian Case in the 1990s," IZA Discussion Papers 1385, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp1385
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    References listed on IDEAS

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    1. Andrea Brandolini, 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Data Quality, and the Time Pattern of Income Inequality," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 58(2), pages 183-239, September.
    2. Katz, Lawrence F. & Autor, David H., 1999. "Changes in the wage structure and earnings inequality," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 26, pages 1463-1555 Elsevier.
    3. Blau, Francine D. & Kahn, Lawrence M., 1999. "Institutions and laws in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 25, pages 1399-1461 Elsevier.
    4. Eswar S Prasad & Francesca Utili, 1998. "The Italian Labor Market; Stylized Facts, Institutions, and Directions for Reform," IMF Working Papers 98/42, International Monetary Fund.
    5. Christopher Erickson & Andrea Ichino, 1995. "Wage Differentials in Italy: Market Forces, Institutions, and Inflation," NBER Chapters,in: Differences and Changes in Wage Structures, pages 265-306 National Bureau of Economic Research, Inc.
    6. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, July.
    7. Claudio Lucifora, 1999. "Wage Inequalities and Low Pay: The Role of Labour Market Institutions," Working Papers 1999.13, Fondazione Eni Enrico Mattei.
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    Cited by:

    1. Piero Casadio, 2010. "Firm level wage bargaining and territorial wage differentials: evidence from the Bank of Italy survey on firms," Politica economica, Società editrice il Mulino, issue 2, pages 241-292.
    2. Plasman, Robert & Rusinek, Michael & Rycx, Francois, 2006. "Wages and the Bargaining Regime under Multi-level Bargaining: Belgium, Denmark and Spain," IZA Discussion Papers 1990, Institute for the Study of Labor (IZA).
    3. Piero, Casadio, 2010. "Contrattazione aziendale integrativa e differenziali salariali territoriali: informazioni dall'indagine sulle imprese della Banca d'Italia," MPRA Paper 29384, University Library of Munich, Germany.
    4. Töngür, Ünal & Elveren, Adem Yavuz, 2014. "Deunionization and pay inequality in OECD Countries: A panel Granger causality approach," Economic Modelling, Elsevier, vol. 38(C), pages 417-425.
    5. D'Amuri, Francesco & Giorgiantonio, Cristina, 2015. "The Institutional and Economic Limits to Bargaining Decentralization in Italy," IZA Policy Papers 98, Institute for the Study of Labor (IZA).
    6. Francesco D'Amuri & Cristina Giorgiantonio, 2014. "Diffusion and outlook of firm-level bargaining in Italy," Questioni di Economia e Finanza (Occasional Papers) 221, Bank of Italy, Economic Research and International Relations Area.
    7. Boeri, Tito, 2014. "Two-Tier Bargaining," IZA Discussion Papers 8358, Institute for the Study of Labor (IZA).

    More about this item

    Keywords

    wage inequality; unions;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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