Collective Bargaining and the Evolution of Wage Inequality in Italy

Abstract

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.

Buy flexible, pay more: The role of temporary contracts on wage inequality

“…From 1980s onwards, income inequality dramatically rose throughout developed countries (Roine and Waldenström, 2015), and several studies have highlighted the role of wage inequality in explaining this trend (Gradín, 2016;Felbermayr et al, 2018;Devicienti et al, 2019). In the same period, temporary contracts gained considerable importance in the labour markets of several countries.…”

“…Much theoretical and empirical research in the economic literature has tried to identify numerous sources of wage inequality, such as discrimination related to individual characteristics, e.g. gender, ethnicity (Barth et al, 2012;Goldin et al, 2017;Barth et al, 2017); globalisation (Helpman, 2017); collective bargaining and unionisation (Lemieux, 2008;Devicienti et al, 2019); education and labour productivity (Iranzo et al, 2008;Faggio et al, 2010;Barth et al, 2016); price levels (Autor et al, 2005;Boeri et al, 2019); and working hours (Checchi et al, 2018;Ciani and Torrini, 2019). A further source of wage inequality may be related to the heterogeneity of job contracts existing in a labour market (Cazes and Laiglesia, 2015), and in particular, to the duality between temporary and permanent workers.…”

“…Thereby, wage inequality may not represent an issue by itself, but some of its determinants do. Understanding what drives wage inequality is very important considering it has grown constantly over the last decades (Lemieux, 2006;Felbermayr et al, 2018;Devicienti et al, 2019).…”

How do Regulated and Unregulated Labor Markets Respond to Shocks? Evidence from Immigrants During the Great Recession

“…However, as Boeri (2014) documents, the percentage of firms relying on the two-tier bargaining -both plant-level and industry-level -decreased over time, down to less than 10% in 2006: employers in Italy typically prefer following the wages set by industry agreements, rather than through further negotiations at the plant level. Devicienti et al (2016) discuss available evidence suggesting that this decline over time in the incidence of firm-level agreements in Italy was partly a consequence of a reduction in unionization rates. Italy's formal labor market is also characterized by relatively high levels of employment protection, and relatively low levels of both unemployment benefits and active labor market policies (such as training programs, job search assistance, counseling, etc.).…”

Monetary Policy and the Cost of Wage Rigidity: Evidence from the Stock Market

“…16 See also Devicienti et al (2016) for worker-level evidence. In addition to surveying the existing literature, we will provide additional corroborating evidence in Section 4.4.…”