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Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy

  • Dell’Aringa, Carlo

    ()

    (Università Cattolica del Sacro Cuore)

  • Lucifora, Claudio

    ()

    (Università Cattolica del Sacro Cuore)

  • Origo, Federica

    ()

    (University of Bergamo)

This paper investigates regional public-private wage differentials in Italy. Following the recent wave of reforms that significantly changed wage setting and employment relations in both sectors – increasing decentralisation in collective bargaining and enforcing a "privatisation" of public sector employment contracts - we present new estimates of the public-private wage gap by geographical location. We report both 'standardised' public-private wage differentials, as well as estimates obtained using Geographically Weighted Regressions methods. We show that significant differences exist in public-private wage differentials across Italian regions, and that the latter can be partly explained by local labour market conditions affecting the private sector and only marginally the public sector. Differences in public-private wage differentials across regions are expected to determine several imbalances in terms of 'wait' unemployment and recruitment problems in the different areas.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 1828.

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Length: 50 pages
Date of creation: Oct 2005
Date of revision:
Publication status: published in: Manchester School, 2007, 75 (4), 445-478
Handle: RePEc:iza:izadps:dp1828
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  1. Oswald, Andrew J, 1985. " The Economic Theory of Trade Unions: An Introductory Survey," Scandinavian Journal of Economics, Wiley Blackwell, vol. 87(2), pages 160-93.
  2. Dell'Aringa Carlo & Origo Federica & Samek Lodovici Manuela, 1999. "Il mercato del lavoro nel Mezzogiorno: il ruolo del costo e della flessibilità del lavoro," L'industria, Società editrice il Mulino, issue 2, pages 251-262.
  3. Lucifora C. & Meurs D., 2004. "The Public Sector Pay Gap in France, Great Britain and Italy," Working Papers ERMES 0403, ERMES, University Paris 2.
  4. Albert Alesina & Stephan Danninger & Massimo Rostagno, 2001. "Redistribution Through Public Employment: The Case of Italy," IMF Staff Papers, Palgrave Macmillan, vol. 48(3), pages 2.
  5. James M. Poterba & Kim S. Rueben, 1994. "The Distribution of Public Sector Wage Premia: New Evidence Using Quantile Regression Methods," NBER Working Papers 4734, National Bureau of Economic Research, Inc.
  6. Lucifora Claudio & Origo Federica, 1999. "Alla ricerca della flessibilità: un'analisi della curva dei salari in Italia," Rivista italiana degli economisti, Società editrice il Mulino, issue 1, pages 3-36.
  7. David G. Blanchflower & Andrew J. Oswald, 1989. "The Wage Curve," NBER Working Papers 3181, National Bureau of Economic Research, Inc.
    • Blanchflower, D. & Oswald, A., 1989. "The Wage Curve," Papers 340, London School of Economics - Centre for Labour Economics.
  8. Heckman, James J & Ichimura, Hidehiko & Todd, Petra E, 1997. "Matching as an Econometric Evaluation Estimator: Evidence from Evaluating a Job Training Programme," Review of Economic Studies, Wiley Blackwell, vol. 64(4), pages 605-54, October.
  9. repec:rie:review:y:1999:v:1:i:1 is not listed on IDEAS
  10. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
  11. Reimers, Cordelia W, 1983. "Labor Market Discrimination against Hispanic and Black Men," The Review of Economics and Statistics, MIT Press, vol. 65(4), pages 570-79, November.
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