IDEAS home Printed from https://ideas.repec.org/p/rye/wpaper/wp007.html
   My bibliography  Save this paper

Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy

Author

Listed:
  • Vincenzo Caponi

    () (Department of Economics, Ryerson University, Toronto, Canada)

Abstract

This paper presents a general equilibrium model of regional unemployment dispersion based on the Mortensen and Pissarides (1999) framework. The model economy presented here has centralized institutions, such as a single central government and central unions, but regional labor markets with differences productivity. The model assumes that unions dislike wage dispersion across regions and the government dislikes population imbalance across the regions. The set up of the model is used to interpret the economic features of the Italian economy between the mid seventies and the end of the past century. By means of calibration using Italian data collected in the year 2000 the paper shows that the model economy explains the important regional dualism between the North and the South of Italy in terms of unemployment. Moreover, the model indicates that the interaction between unions and the government also generates low wage rates in the high productivity regions accompanied by low unemployment rates, even when the Northern worker is the median worker that determines the unions policies.

Suggested Citation

  • Vincenzo Caponi, 2009. "Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy," Working Papers 007, Ryerson University, Department of Economics.
  • Handle: RePEc:rye:wpaper:wp007
    as

    Download full text from publisher

    File URL: http://economics.ryerson.ca/workingpapers/wp007.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    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. Giuseppe Nicoletti & Stefano Scarpetta & Olivier Boylaud, 2000. "Summary Indicators of Product Market Regulation with an Extension to Employment Protection Legislation," OECD Economics Department Working Papers 226, OECD Publishing.
    3. Eliana Viviano, 2002. "Un�analisi critica delle definizioni di disoccupazione e partecipazione in Italia," Temi di discussione (Economic working papers) 450, Bank of Italy, Economic Research and International Relations Area.
    4. Marco Manacorda & Barbara Petrongolo, 2006. "Regional mismatch and unemployment: theory and evidence from Italy, 1977–1998," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(1), pages 137-162, February.
    5. Faini, Riccardo, 1999. "Trade unions and regional development," European Economic Review, Elsevier, vol. 43(2), pages 457-474, February.
    6. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics,in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
    7. Faini, Riccardo & Galli, Giampaolo & Gennari, Pietro & Rossi, Fulvio, 1997. "An empirical puzzle: Falling migration and growing unemployment differentials among Italian regions," European Economic Review, Elsevier, vol. 41(3-5), pages 571-579, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Gabriele Cardullo, 2012. "Public Sector Wage Bargaining, Unemployment, and Inequality," DEP - series of economic working papers 2/2012, University of Genoa, Research Doctorate in Public Economics.
    2. repec:bla:jpbect:v:19:y:2017:i:2:p:490-510 is not listed on IDEAS
    3. Gabriele Cardullo, 2017. "The Welfare and Employment Effects of Centralized Public Sector Wage Bargaining," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 19(2), pages 490-510, April.

    More about this item

    Keywords

    Italy; Regional Dualism; Mezzogiorno.;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • J51 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Trade Unions: Objectives, Structure, and Effects
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rye:wpaper:wp007. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maurice Roche). General contact details of provider: http://edirc.repec.org/data/deryeca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.