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The effects of unions on wage inequality. The Italian case in the 1990's

  • Daniele CHECCHI

    ()

  • Laura PAGANI

    ()

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.

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Paper provided by Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano in its series Departmental Working Papers with number 2004-29.

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Date of creation: 01 Jan 2004
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Handle: RePEc:mil:wpdepa:2004-29
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  1. Brandolini, A., 1999. "The Distribution of Personal Income in Post-War Italy: Source Description, Date Quality, and the Time Pattern of Income Inequality," Papers 350, Banca Italia - Servizio di Studi.
  2. Christopher L. Erikson & Andrea Ichino, 1994. "Wage Differentials in Italy: Market Forces, Institutions, and Inflation," NBER Working Papers 4922, National Bureau of Economic Research, Inc.
  3. Eswar Prasad & Francesca Utili, 1998. "The Italian Labor Market; Stylized Facts, Institutions, and Directions for Reform," IMF Working Papers 98/42, International Monetary Fund.
  4. 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.
  5. Claudio Lucifora, 1999. "Wage Inequalities and Low Pay: The Role of Labour Market Institutions," Working Papers 1999.13, Fondazione Eni Enrico Mattei.
  6. 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.
  7. Richard B. Freeman & Lawrence F. Katz, 1995. "Differences and Changes in Wage Structures," NBER Books, National Bureau of Economic Research, Inc, number free95-1, June.
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