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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 of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp1385
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    7. Mr. Eswar S Prasad & Ms. Francesca Utili, 1998. "The Italian Labor Market: Stylized Facts, Institutions, and Directions for Reform," IMF Working Papers 1998/042, International Monetary Fund.
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    Cited by:

    1. Valeria Cirillo & Matteo Sostero & Federico Tamagni, 2019. "Firm-level pay agreements and within-firm wage inequalities: Evidence across Europe," LEM Papers Series 2019/12, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    2. Juan Francisco Canal Domínguez & César Rodríguez Gutiérrez, 2016. "Collective bargaining, wage dispersion and the economic cycle: Spanish evidence," The Economic and Labour Relations Review, , vol. 27(4), pages 471-489, December.
    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. Mirella Damiani & Andrea Ricci, 2011. "Decentralised bargaining and performance related pay: new evidence from a panel of Italian firms," Quaderni del Dipartimento di Economia, Finanza e Statistica 97/2011, Università di Perugia, Dipartimento Economia.
    5. Robert Plasman & Michael Rusinek & François Rycx, 2006. "Wages and the bargaining regime under multi-level bargaining: Belgium, Denmark and Spain," DULBEA Working Papers 06-01.RS., ULB -- Universite Libre de Bruxelles.
    6. Elin Svarstad & Ragnar Nymoen, 2023. "Wage inequality and union membership at the establishment level: An econometric study using Norwegian data," Oxford Economic Papers, Oxford University Press, vol. 75(2), pages 371-392.
    7. D'Amuri, Francesco & Giorgiantonio, Cristina, 2015. "The Institutional and Economic Limits to Bargaining Decentralization in Italy," IZA Policy Papers 98, Institute of Labor Economics (IZA).
    8. 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.
    9. Boeri, Tito, 2014. "Two-Tier Bargaining," IZA Discussion Papers 8358, Institute of Labor Economics (IZA).
    10. 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.
    11. Andrea Garnero & François Rycx & Isabelle Terraz, 2020. "Productivity and Wage Effects of Firm‐Level Collective Agreements: Evidence from Belgian Linked Panel Data," British Journal of Industrial Relations, London School of Economics, vol. 58(4), pages 936-972, December.
    12. 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.
    13. Carlo Dell’Aringa & Laura Pagani, 2007. "Collective Bargaining and Wage Dispersion in Europe," British Journal of Industrial Relations, London School of Economics, vol. 45(1), pages 29-54, March.

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    JEL classification:

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

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