Wages and Prices in Italy During the Crisis: The Firmss Perspective

D’Amuri, Francesco; Fabiani, Silvia; Sabbatini, Roberto; Tartaglia-Polcini, Raffaele; Venditti, Fabrizio; Viviano, Eliana; Zizza, Roberta

doi:10.2139/ssrn.2737301

Cited by 3 publications

(4 citation statements)

References 7 publications

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“…Italy is an interesting case to study as the European …nancial crisis severely hit its economy, causing a collapse in demand, a sharp increase in uncertainty and di¢ culties in accessing external …nance (D'Amuri et al, 2015). This landscape is consistent with the results based on the Italian part of the WDN survey.…”

Section: Resultssupporting

confidence: 78%

“…This is again consistent with WDN data, as the share of …nancially constrained …rms, as de…ned in Section 4, is slightly above 50%. Concerning price-cost margins, 70% of …rms declared to have cut pro…t margins in the period 2010-2013 as 10 The idea is that information asymmetries are likely to be especially large for young and newlyestablished …rms, because creditors have not had enough time to monitor such …rms and because such …rms have not had enough time to build long-term relationships with suppliers of …nance (see inter alia Coluzzi et al (2015) and references therein). 11 We have used other proxies for productivity, but results are robust -see below-.…”

Section: Resultsmentioning

confidence: 99%

“…They …nd that …nancial constraints fall sharply as young and small …rms start to mature and grow. 10 Eventually, these relations appear to level o¤. Moreover, they argue that an appealing feature of these variables is that they are much less endogenous than most other usual proxies for …nancial constraints, such as a …rm's leverage and cash ‡ow.…”

Section: Data and Empirical Strategymentioning

confidence: 99%

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I Will Survive. Pricing Strategies of Financially Distressed Firms

et al. 2017

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We consider a standard result of customer market theory: if firms have stable customer relations and face financial frictions, they may keep prices relatively high in times of low demand and vice versa. Indeed, during recessions, when firms have low cash flow and greater difficulty in raising external funds, they may set higher prices on their locked-in shoppers to maintain short-term profits at the expense of future market shares. We extend this theoretical framework so that the countercyclical behaviour of price margins is strengthened by the expected persistence of the downturn and the procyclicality of competitive pressures. We test these predictions for Italian firms participating in the 2014 Wage Dynamics Network Survey. All things being equal, financially constrained firms charge higher markups when faced with low demand; this behaviour is more evident when demand is perceived as being persistent. Our findings suggest that the severity of financial constraints in Italy was one of the causes of the sustained growth of prices in 2010-2013, notwithstanding the considerable slack in the economy. JEL Classification: C25, C26, D22, L11.

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Section: Resultssupporting

confidence: 78%

Section: Resultsmentioning

confidence: 99%

Section: Data and Empirical Strategymentioning

confidence: 99%

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I Will Survive. Pricing Strategies of Financially Distressed Firms

et al. 2017

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“…19 Only in well-delimited cases of firm's restructuring or crisis, second-level deals can (temporarily) cut wages below the nationally set sectoral minimum. Still, although legally possible, evidence of firm-level agreement envisaging a decrease in the wage below these minima is scant (see D'Amuri et al 2015). 20 According to the OECD index of strictness of employment protection regulation, Italy ranks fifth among the OECD countries.…”

Section: A Theory Of Gapsmentioning

confidence: 99%

Do Marginal Products Differ from User Costs? Micro-Level Evidence from Italian Firms

Lenzu,

Manaresi

2018

SSRN Journal

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Using micro-data on firm-specific borrowing costs and wages, we demonstrate that distortions in firms' employment and investment policies can be empirically measured using firm-level gaps between marginal revenue products and user costs (MRP-cost gaps). We estimate MRP-cost gaps for 4 million firm-year observations in Italy between 1997 and 2013, showing that the variation in these measures is closely related to the extent of credit market frictions and to the degree of labor market rigidities individual firms face.Using the estimated MRP-cost gaps, we propose a reallocation algorithm that helps us assess the scope of capital and labor misallocation in Italy, and its impact on aggregate output and total factor productivity (TFP). We calculate that, holding constant the aggregate capital and labor endowments in the economy, the Italian corporate sector could produce between 3% to 4% more output by reallocating resources from over-endowed producers toward higher-value users. The output losses from misallocation are larger during episodes of macro-financial instability, in non-manufacturing industries, and in geographical regions with less developed socio-economic institutions.

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Opening the black-box of graduates’ horizontal skills: diverging labour market outcomes in Italy

Cattani

Pedrini

2020

Studies in Higher Education

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Wages and Prices in Italy During the Crisis: The Firmss Perspective

Cited by 3 publications

References 7 publications

I Will Survive. Pricing Strategies of Financially Distressed Firms

I Will Survive. Pricing Strategies of Financially Distressed Firms

Do Marginal Products Differ from User Costs? Micro-Level Evidence from Italian Firms

Opening the black-box of graduates’ horizontal skills: diverging labour market outcomes in Italy

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