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The labour market and the distribution of income: an empirical analysis for Italy

Author

Listed:
  • Fabio Clementi

    (University of Macerata)

  • Michele Giammatteo

    (Bank of Italy)

Abstract

This paper provides an empirical examination of the distribution of labour earnings in Italy. Using four waves of data from the Participation Labour Unemployment Survey, a database of information on the Italian labour market supply, we find the shape of the observed distributions to be positively skewed with a “fat” and long tail on the right. We also address the question of earnings dispersion by applying a “nested” decomposition procedure of the Theil inequality measure, which combines into a unified framework the standard decompositions by population subgroups and income sources. The empirical evidence obtained points to the key role played by the self-employees in shaping labour income inequality, especially at the upper extreme of the earnings distribution, and the emergence of non-standard forms of employment as an important feature of the contemporary workplace.

Suggested Citation

  • Fabio Clementi & Michele Giammatteo, 2012. "The labour market and the distribution of income: an empirical analysis for Italy," Working Papers 42-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised Jul 2014.
  • Handle: RePEc:mcr:wpaper:wpaper00042
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    References listed on IDEAS

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    1. Paul, Satya, 2004. "Income sources effects on inequality," Journal of Development Economics, Elsevier, vol. 73(1), pages 435-451, February.
    2. Barth, Erling & Lucifora, Claudio, 2006. "Wage Dispersion, Markets and Institutions: The Effects of the Boom in Education on the Wage Structure," IZA Discussion Papers 2181, Institute for the Study of Labor (IZA).
    3. Anderson, Edward, 2005. "Openness and inequality in developing countries: A review of theory and recent evidence," World Development, Elsevier, vol. 33(7), pages 1045-1063, July.
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    5. Martin Schindler, 2009. "The Italian Labor Market; Recent Trends, Institutions, and Reform Options," IMF Working Papers 09/47, International Monetary Fund.
    6. Torrini, Roberto, 2005. "Cross-country differences in self-employment rates: the role of institutions," Labour Economics, Elsevier, vol. 12(5), pages 661-683, October.
    7. Matteo, PICCHIO, 2006. "Wage Differentials and Temporary Jobs in Italy," Discussion Papers (ECON - Département des Sciences Economiques) 2006033, Université catholique de Louvain, Département des Sciences Economiques.
    8. Stephen Machin & John Van Reenen, 1998. "Technology and Changes in Skill Structure: Evidence from Seven OECD Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 113(4), pages 1215-1244.
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    11. Mark P. Moore & Priya Ranjan, 2005. "Globalisation vs Skill-Biased Technological Change: Implications for Unemployment and Wage Inequality," Economic Journal, Royal Economic Society, vol. 115(503), pages 391-422, April.
    12. Alan Harrison, 1981. "Earnings by Size: A Tale of Two Distributions," Review of Economic Studies, Oxford University Press, vol. 48(4), pages 621-631.
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    More about this item

    Keywords

    inequality; size distribution; labour income;

    JEL classification:

    • D33 - Microeconomics - - Distribution - - - Factor Income Distribution
    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement

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