Riccardo Leoni

The’ 93 July Agreement in Italy: Bargaining Power, Efficiency Wages or Both?

The chapter investigates the effects of the wage determination mechanism based on bargaining and efficiency wages introduced in Italy in 1993. The analysis deals specifically with the productivity effects of the efficiency wage approach and tests the role of different profit sharing schemes based on formal performance evaluations bargained with the unions’ representatives. Traditional indicators, related to output-based variable pay (turnover, productivity, defects and cost targets) are shown to be inferior to new indicators, of input-based nature, which stimulate employees to improve their competences by learning, job rotation, team working, suggestion system and involvement. While the former refers to a traditional design setting, the latter is consistent with a Business Process Reengineering, which is a prerequisite for the so-called high road of innovation and development.

High Performance Work Practices, Industrial Relations and Firm Propensity for Innovation

This paper examines the influence of high performance work practices (HPWPs) and industrial relations (IR) on firm propensity for product and process innovation. The authors distinguish between two styles of workplace governance – democratic and autocratic – based on whether the management is willing to cooperate with workers’ representatives, and two styles of IR – participatory or advocatory – based on the extent of their influence. The estimates carried out indicate that HPWPs always have a significant and positive effect on both product and process innovation, while IR has a positive effect only in respect of product innovation, and provided the style is of participatory type. An interpretation of the IR effects could be that process innovation makes workers feel insecure about their jobs, while product innovation represents the path that can better protect workers’ prospects in an uncertain and unstable competitive environment. In respect of the style of IR, the effect is positive when workers’ representatives adopt a participatory role; the effect is instead cancelled out when employing an advocatory role. Participatory style IR is very likely to contribute to creating a positive attitude towards change, with workers willing to share the adjustment costs (such as learning new competencies), while advocatory style IR generates, in the minds of managers, a perception of the risk that investments in product innovation may turn into sunk costs for the firm through a likely appropriation of quasi-rent by workers (‘hold-up problem’).

Graduate employability and the development of competencies. The incomplete reform of the “Bologna Process”

Purpose - – The purpose of this paper is to analyse the coherence between competency mismatches and the objective of European policymakers to transform the higher education system through the Bologna Process and the Dublin Descriptors, moving from the transfer of knowledge from the teacher to learning by the student and from disciplinary knowledge to competencies. Design/methodology/approach - – The paper is based first on the theoretical arguments that confront the European reform of the tertiary education system and the nature of competency mismatches, and second on graduate earnings function estimates using two Italian databases. The paper demonstrates the waning signalling power associated with university degrees and the disruptive assertion of the competency concept. Findings - – The theoretical arguments developed suggest that competency mismatches are not only responsible for the medium-low positioning of the competency profile with respect to a counterfactual constituted by a graduate with a good match but also tend to affect the growth path of the competencies themselves: the bigger the initial gap, the smaller the steps in their growth. The econometric estimates carried out document that the level of expressed competencies drives graduate remuneration. Originality/value - – By disentangling educational outcomes (i.e. disciplinary knowledge) from requested competencies, the study demonstrates that firms remunerate competencies and to a far lesser extent disciplinary knowledge

Il salario tra premio di risultato e nuove pratiche di gestione delle risorse umane. Gli effetti dell’Accordo di Luglio del 1993

The theoretical result according to which the wage is higher when bargaining and efficiency wages interact, is tested by estimating a formally derived wage equation on an Italian firm-level panel from 1990 to 1999. The 1993 July Agreement, which fostered the adoption of decentralised incentive mechanisms, is used as a natural experiment. The main results are the following: a) Subsequent the adoption of the 1993 Agreement, the elasticity of wages to firm profits increases from 2.6 to 3.6%; the corresponding estimated wage premium is equal to 3.6% of the average wage; b) Relative to the whole sample of firms, those that signed the decentralised contract show higher wages, more persist- ent wage dynamics but lower variable wage premia; c) For the same firms, a significant increase of the rent sharing is obtained through the diffusion of individual incentives and productivity evaluation procedures; d) a considerable bias is introduced if are not profit endogeneity and unobservable fixed effects are not accounted for.

Cycles, growth and the great recession

Cycles, Growth and the Great Recession is a collection of papers that assess the nature and role of the business cycle in contemporary economies. These assessments are made in the context of the financial market instability that distinguishes the Great Recession from previous post-war slowdowns. Theorists and applied scholars in the fields of economics and mathematical economics discuss various approaches to understanding cycles and growth, and present mathematical and applied macro models to show how uncertainty shapes cycles by affecting the economic agent choice. Also included is an empirical section that investigates how the Great Recession affected households’ housing wealth, labour productivity and migration decisions.