Italian male wage inequality has increased at a relatively fast pace from the mid‐1980s until the early 2000s, while it has been persistently flat since then. We analyse this trend, focusing on the period of most rapid growth in pay dispersion. By accounting for worker and firm fixed effects, it is shown that workers' heterogeneity has been a major determinant of increased wage inequalities, while variability in firm wage policies has declined over time. We also show that the growth in pay dispersion has entirely occurred between livelli di inquadramento, that is, job titles defined by national industry‐wide collective bargaining institutions, for which specific minimum wages apply. We conclude that the underlying market forces determining wage inequality have been largely channelled into the tight tracks set by the centralized system of industrial relations.

We study a model where wage differences between men and women arise from taste-based discrimination and monopsonistic mechanisms. We show how preferences against women affect heterogeneity in firms' pay policies in the context of an imperfect labour market, deriving a rigorous test for the presence of taste-based discrimination and of other firm-level mechanisms driving the gender wage gap, in particular compensating wage differentials. These results inform an analysis of sex pay differences in the Italian manufacturing sector showing that taste-based discrimination and preferences for workplaces providing more flexible schedules are two significant determinants of the gender wage gap.

No abstract

This study analyses the representativeness of employer associations in Italy, using unique firm‐level data with information on employers' affiliation and their characteristics. We document that a persistent decline in affiliation rates to employers' associations has occurred during the last two decades. We show that affiliated companies are positively selected, as they tend to be larger, older, more likely to be located in richer regions, to be export and innovation oriented, and more likely to provide training. Using longitudinal data and regression decomposition techniques, we show that larger firms have been more affected by the decline in affiliation rates over time. Finally, we show that the level of representativeness of employers' associations has a weak positive effect on collective bargaining occupational wage minima settled by these organizations in national industry‐wide collective contracts after a negotiation process with trade unions.