Enzo Valentini

Does Immigration Raise Blue and White Collar Wages of Natives? The Case of Italy

This paper analyses theoretically and empirically the effects of immigration on the wage rate of native workers. Empirical literature rarely finds that immigration generates a fall in the wages of manual workers. The theoretical model presented in this paper justifies those results, by hypothesizing an economic system where advanced firms buy an intermediate good from traditional firms, which employ manual workers in both clean and dirty tasks, the latter being more disliked by native workers. We conclude that native skilled wages always increase whereas native unskilled wages can both increase or decrease with immigration. An empirical analysis of the Italian labour market follows, showing that all native workers wages rise with immigration.

Underground Economy, Evasion and Inequality

Economic theory is paying increasing attention to a non-observed economy (NOE) and its causes. Recently, a couple of works (Rosser et al., 2000, 2003) have claimed that there is a positive relationship between income inequality and the size of NOE. This supposed relationship is not so clear and deserves in-depth analysis. There is a crucial aspect that has been completely avoided in these studies: income inequality is mainly measured using ‘regular’ incomes and this fact could lead to some bias. The existence of a certain size of NOE implies some income evasion that can affect the inequality indexes used in the study of the relationship between NOE and inequality. Including the regional share of NOE in a wage equation, I find that, in the specific case of the Italian private sector employees, the income evasion attached to NOE tends to reduce inequality measured by regular wages statistics.

The Impact of Foreign Direct Investment on the Productivity of the Balkan Countries

Balkan countries are trying to attract foreign direct investment, hoping that foreign enterprises, besides employment, will also convey their know-how. This will later be transferred to their national industries, where it is expected to increase productivity. This paper examines the effects of foreign direct investment on productivity growth, university enrollment and unemployment in eight Balkan countries: Albania, Bosnia, Bulgaria, Croatia, Montenegro, Macedonia, Romania and Slovenia. The empirical analysis shows significant results about the positive impact of both investments and FDI on productivity growth in the respective countries. Additionally, the data show a positive impact of FDI on university enrollment, but not a negative correlation between FDI and unemployment. Furthermore, the results confirm that FDI effects may have positive consequences in the host country depending on its level of economic development and institutional quality.