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Do satisfactory working conditions contribute to explain earning differentials in Italy? A panel data approach


  • Ambra Poggi

    () (SEMEQ Department - Faculty of Economics - University of Eastern Piedmont)


The aim of this paper is to analyze the wage differentials associated with non-pecuniary working conditions (distance to job, environment conditions, working times) using objective and subjective data. In fact, the individual can be compensated for unsatisfactory working conditions by higher wage (compensating wage differentials theories). Or, if productivity is positively associated with satisfaction, higher wages can be offered to more productive workers, that are workers with higher level of satisfaction (wage efficiency theories). Therefore, we estimate a wage equation with variables that capture workers’ subjective view about their current working conditions allowing for unobserved individual heterogeneity. Finally, we quantify any systematic differences in the wage differentials associated with nonpecuniary working conditions by occupation in order to infer whether any apparent productivity effects of flextime may be relatively greater than the hedonic effects for certain occupations.

Suggested Citation

  • Ambra Poggi, 2005. "Do satisfactory working conditions contribute to explain earning differentials in Italy? A panel data approach," Working Papers 104, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  • Handle: RePEc:upo:upopwp:104

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    wage differentials; job satisfaction; working conditions; occupations;

    JEL classification:

    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J81 - Labor and Demographic Economics - - Labor Standards - - - Working Conditions
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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