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Competition firm size and returns to skills : evidence from currency shocks and market liberalizations

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  • Francesco Vona

    (Observatoire français des conjonctures économiques)

  • Michele Raitano

    (Sapienza Università di Roma)

Abstract

We investigate the impact of product market competition on returns to skills in Italy using a longitudinal dataset on individual working histories. This impact is identified using three exogenous shocks affecting competition: the unforeseen devaluation of the Lira in 1992, its return to a fixed exchange regime in 1996 and the market liberalisation in the utility and transport sectors in the late 1990s–early 2000s. We analyse how firm heterogeneity and shocks of different types and signs affect the impact of competition on skill premia. We find that opposite shocks have opposite effects: an increase (resp. decrease) in international competition increases (resp. decreases) skill premia. Moreover, international shocks have greater effects on medium sized firms, while domestic liberalisation shocks have greater effects on large incumbents.

Suggested Citation

  • Francesco Vona & Michele Raitano, 2017. "Competition firm size and returns to skills : evidence from currency shocks and market liberalizations," Sciences Po publications info:hdl:2441/5ok8k1fle59, Sciences Po.
  • Handle: RePEc:spo:wpmain:info:hdl:2441/5ok8k1fle59qeqvc9bh292v16j
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    Cited by:

    1. Michel Raitano & Francesco Vona, 2018. "Nepotism vs specific skills: the effect of professional liberalization on returns to parental back ground of Italian lawyers," Documents de Travail de l'OFCE 2018-36, Observatoire Francais des Conjonctures Economiques (OFCE).
    2. Alessia Matano & Paolo Naticchioni & Francesco Vona, 2019. "The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages," LEM Papers Series 2019/08, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    3. Falvey, Rod & Greenaway, David & Silva, Joana, 2010. "Trade liberalisation and human capital adjustment," Journal of International Economics, Elsevier, vol. 81(2), pages 230-239, July.

    More about this item

    Keywords

    Competition; Currency shocks; Firm size; Product; Market regulation; Skill premia;

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • D41 - Microeconomics - - Market Structure, Pricing, and Design - - - Perfect Competition

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