Giovanni Sulis

What Can Monopsony Explain of the Gender Wage Differential in Italy

Purpose - This paper seeks to study gender wage differentials in Italy using first-order predictions of monopsony-search models. It compares empirical predictions of these models against other competing ones of wage determination in non-competitive settings. Design/methodology/approach - The paper looks at the empirical relevance of the model in terms of third degree wage discrimination among men and women by estimating the labour supply elasticity to the individual firm. It also tests the monopsony model using a “natural” experiment. Italian administrative longitudinal data from INPS are used. Findings - Women have lower elasticity of labour supply to the individual firm: employer size regressions indicate larger effects (and consequently lower elasticity) for women as predicted by the monopsony model. Using the theoretical dynamic monopsony-search model of Burdett and Mortensen, wage elasticity of separations and recruits confirm this result. Using relative men/women employment effects resulting from institutional changes in wage indexation mechanism (Scala Mobile), it is found that relative male employment responded differently in the two periods to the exogenous relative increase in the wage differential, as predicted by the monopsony model. Search frictions explain about 50 per cent of the gender differential. Research limitations/implications - No role for discrimination. Better controls for rents and union status would be needed. More rich firm data would be needed. Originality/value - The paper is one of the few attempts of testing implications of monopsony models in unionised labour markets, such as Italy, after some important reforms in wage bargaining agreements. The change in institutional agreements is an interesting test for different theories of wage determination.

Schooling, Production Structure and Growth: An Empirical Analysis on Italian Regions

This paper analyses the growth effects of high levels of human capital at the industry level. By favouring technology adoption, human-capital-intensive industries grow faster compared to less human-capital-intensive industries in economies that have higher levels of human capital. Using data for nine macro sectors of manufacturing industries in the twenty Italian regions, the results show positive and significant effects of human capital levels and accumulation on value added growth. This result is robust to a series of sensitivity checks such as measures of productivity growth and different indicators of human capital. This finding is particularly important for Italy, as it has always had a model of industrial specialization focused on the traditional sectors which have a low content of technology and human capital.

On the Potential Interaction between Labour Market Institutions and Immigration Policies

Using data on migration flows for a sample of 15 OECD countries over the period 1980-2006, we analyse the effect of unemployment and labour institutions such as employment protection legislation, coverage of unemployment benefits, minimum wages, union power and tax wedge on migration flows. We allow for interactions of these institutions with migration entry laws, as both affect equilibrium wages and employment in destination countries, influencing mobility decisions of immigrants. We find strong and negative effects of unemployment, employment protection and migration policy on flows. The negative effect of migration policy on flows is larger in countries with high than in countries with low employment protection. We find positive effects for minimum wages, unemployment benefits and union power. We deal with potential endogeneity of the variables of interest and report heterogeneous effects depending on the group of countries of origin and destination.

Wage Mobility in the Italian Labour Market: Comparing Search, Matching and Training Models

This paper studies the sources of wage growth and the process of turnover for a sample of Italian male workers employed in the private sector. Different theories based on the idea of job-specific skill investment are tested and discussed. Results indicate a consistent proportion of wage cuts upon moving to a new job and some evidence of positive duration dependence in reservation wages. This suggests the importance of matching and human capital components in wage determination. However, mobility patterns and wage dynamics can hardly be explained by a single model; each model is instead only able alone to capture some stylised facts. Heterogeneity in mobility rates plays also an important role.

Unions and investment in intangible capital

Although coverage of collective bargaining agreements has been declining for decades in most countries, it is still extensive, especially in non-Anglo-Saxon countries. Strong unions may influence firms’ incentives to invest in capital, particularly in sectors where capital investments are sunk (irreversible), as in research-intensive sectors. Whether unions affect firms’ investment in capital depends on the structure and coordination of bargaining, the preference of unions between wages and employment, the quality of labor-management relations, and the existence of social pacts, among other factors.