Claudio Lucifora

The Public Sector Pay Gap in France, Great Britain and Italy

We investigate public-private pay determination using French, British and Italian microdata. While traditional methods focus on parametric methods to estimate the public sector pay gap, in this paper, we use both non-parametric (kernel) and quantile regression methods to analyse the distribution of wages across sectors. We show that the public-private (hourly) wage differential is sensitive to the choice of quantile and that the pattern of premia varies with both gender and skill. In all countries the public sector is found to pay more low skilled workers with respect to the private sector, whilst the reverse is true for high skilled workers. The effects are more pronounced for females.

Collective bargaining and relative earnings in Italy

Abstract The most commonly studied aspect of unionism is the relative wage effects that the presence of unions generates. Numerous studies, predominantly for US and UK labour markets, have attempted to measure the extent of the union–nonunion wage gap. Yet, despite the importance of unions in wage determination, no such evidence exists for Italy. Two main reasons can be put forward to explain the lack of studies: firstly, to date, no information on union status was available in any of the existing earnings surveys; secondly, the union-nonunion distinction has a different meaning in the Italian industrial relations system. The purpose of this study is to investigate the impact of unions on relative wages using establishment-level data for the metal-mechanical industry. A positive (statistically statistically) wage differential is found in establishments where unions are recognised for local collective bargaining. The wage gap is shown to be bigger for white-collar workers. After rejecting the hypothesis of a constant wage differential, various differentials according to establishment characteristics are calculated. Union-threat effects show a positive effect on pay in the sector not covered by local bargaining.

Why so Unhappy? The Effects of Unionisation on Job Satisfaction

We use linked employer-employee data to investigate the job satisfaction effect of unionisation in Britain. We depart from previous studies by developing a model that simultaneously controls for the endogeneity of union membership and union recognition. We show that a negative association between membership and satisfaction only emerges where there is a union recognised for bargaining, and that such an effect vanishes when the simultaneous selection into membership and recognition is taken into account. We also show that ignoring endogenous recognition would lead to conclude that membership has a positive effect on satisfaction. Our estimates indicate that the unobserved factors that lead to sorting across workplaces are negatively related to the ones determining membership and positively related with those generating satisfaction, a result that we interpret as being consistent with the existence of queues for union jobs.

The Wage Expectations of European Business and Economics Students.

Expected earnings and expected returns to education are seen by labor economists as a major determinant of educational attainment. In spite of this, the empirical knowledge about expectations and their formation is scarce. In this paper we report the results of the first systematic study of the wage expectations of European university students. Our data are based on a uniform questionnaire answered by about 3,000 business and economics university students across Europe. We study the determinants of wage expectations and expected employment probabilities, the variability of these expectations and their variation across countries and universities. We also examine the tradeoff between expected starting wages and expected wage growth.

Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy

In this paper we investigate regional public–private wage differentials in Italy. Following the recent wave of reforms that significantly changed wage setting and employment relations in both sectors—increasing decentralization in collective bargaining and enforcing a ‘privatization’ of public sector employment contracts—we present new estimates of the public–private wage gap by geographical location. We report both ‘standardized’ public–private wage differentials and estimates obtained using geographically weighted regression methods. We show that significant differences exist in public–private wage differentials across Italian regions, and that the latter can be partly explained by local labour market conditions affecting the private sector and only marginally the public sector. Differences in public–private wage differentials across regions are expected to determine several imbalances in terms of ‘wait’ unemployment and recruitment problems in the different areas.

Wage formation under union threat effects: Theory and empirical evidence

Abstract Trade union activity may have an impact on wages outside the bargaining sector through threat effects. In this paper, a model of wage formation with endogenous bargaining structure is developed. We show that in firms with low union density, no local collective bargaining arises and the wage outcome equals the reservation wage. For higher density levels, the union threat is effective and the wage level is higher than the reservation wage even if there is no collective bargaining at the firm level. An empirical specification of the model is derived and fitted to establishment-level data for the Italian metal-mechanical engineering industry. Empirical results suggest the presence of endogenous selectivity in the choice of the bargaining regime, and confirm the existence, according to local union density, of different wage determination patterns. Threat effects are shown to be particularly relevant for establishments with an intermediate level of union density.

The College Wage Gap in 10 European Countries: Evidence from Two Cohorts

We study the recent evolution of the college wage gap with a unique data set that comprises two cohorts and 10 European countries from the early to mid 1980s to the mid to late 1990s. We find evidence of significant cross country differences in the level and dynamics of the gap. There is also evidence that both the level and the growth of the college wage gap significantly differ between cohorts. The estimated growth in the gap turns out to be negatively correlated to changes in relative supply and positively correlated both with the long run rate of productivity growth and with an index of between industry demand shocks. Institutional changes also matter, and we find that countries that have experienced declines in union density, in the centralization of the wage bargain and in employment protection measures have also had a faster growth in the college wage gap.

Workers' Perceptions of Job Insecurity: Do Job Security Guarantees Work?

We investigate the effect of employer job security guarantees on employee perceptions of job insecurity. Using linked employer–employee data from the 1998 British Workplace Employee Relations Survey, we find job security guarantees reduce employee perceptions of job insecurity. This finding is robust to endogenous selection of job security guarantees by employers engaging in organizational change and workforce reductions. Furthermore, there is no evidence that increased job security through job guarantees results in greater work intensification, stress, or lower job satisfaction.

Determinants of grades in maths for students in economics

This paper investigates the determinants of grades achieved in mathematics by rst-year students in Economics. We use individual administrative data from 1993 to 2005 to t an educational production function. Our main ndings suggest that good secondary school achievements and the type of school attended are signi cantly associated with maths grades. Ceteris paribus, females typically do better than males. Since students can postpone the exam or repeat it when they fail, we also analyze the determinants of the elapsed time to pass the exam using survival analysis. Modeling simultaneously maths grades and the hazard of passing the exam, we nd that the overall hazard rate of passing the exam is higher for those students who get the higher grades. The longer students wait to take the exam, the less likely they are to obtain high grades

Public-Private wage gaps and skill levels: Evidence from French, British and Italian micro data

Purpose - The authors aim to investigate public-private pay determination using French, British and Italian micro data from the 2001 ECHP (European Community Household Panel) and estimate public/private wage differentials by country. By focussing on different countries, they exploit institutional differences to gain insights on the process of pay formation. Design/methodology/approach - The authors use regression techniques to compute the pay premium both at the average and at different education/skill levels. They then decompose the observed differences into a part due to characteristics and another part due to different returns between sectors, also at different quantiles of the wage distributions within skills. Findings - Even after controlling for observable characteristics, the authors find an overall positive wage differential for public sector workers in each of the three countries. As expected, the differential varies by skill. In general, the present findings do not fully support the view that the public (private) sector pays more (less) among the low skilled than the private (public) sector, and that the opposite is true for the highly skilled. The authors also document that the public pay premium varies as one moves up or down in the skill distribution. Practical implications - On the one hand, the authors’ results confirm that the public sector acts in general as a “fair employer”, compressing pay dispersion with respect to the private sector. On the other hand, the interactions of public and private labour market institutional arrangements play a crucial role in shaping the structure of relative wages across sectors. For example, when the monopsony power in wage bargaining is relevant in both sectors as, for example, in Britain, the private sector pays in absolute value proportionally less, and also the public wage premium is smaller. Originality/value - This is the first attempt to use comparable data for three countries to analyse public/private wage differences by skill levels and to link the evidence with differences in public/private wage setting regimes.