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Abstract:
This study provides an assessment of the features that, operating "inside the black box", shapes the evolution of the Italian economy. In the first section the focus is placed on the functioning of the labour market at the aggregate level. The picture described suggests that the Italian labour market is characterized by high employment rates for adult males and both low participation and low employment rates for other groups of individuals (such as young, old and females) and by a large share of long-term unemployment. The rise in unemployment and its persistently high level have been blamed, both in Italy and in other European countries, on imperfections and rigidities originating mainly in the labour market. In this case, both strong employment protection regulation and rigid system of wage determination appear to have played a major role in Italy. In particular, the existence of high wage floor - either set through statutory minimum wages or by collective bargaining - has the effect of segmenting the labour force, increasing job instability and paradoxically increasing the duration of unemployment. An additional dimension of "segmentation" also characterizes the Italian labour market, notably the 30 percent's unemployment rate in the South (6 percent in the North) and the presence of a large share of the labour force employed in the underground economy. In the last section, we discuss how the decentralisation of bargaining, the introduction of higher labour market flexibility as well as the reform of social security, could reduce "insider" power in the labour market and eliminate the vicious cycle that tends to displace workers out of the "primary" sector, thus fueling the irregular economy.

Unemployment, wages, labour market, institutions

Abstract:
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.

Abstract:
This paper investigates 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 standardised public-private wage differentials, as well as estimates obtained using Geographically Weighted Regressions 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.

public-private wage differentials, regional labour market, geographically weighted regressions

Abstract:
The level at which collective bargaining takes place is usually considered important in determining wage levels and wage inequalities. Two different situations are considered: a first in which bargaining is only 'multi-employer', and a second in which it is 'multi-level', in the sense that workers can be covered by both a 'multi-employer' and a 'single-employer' contract at the same time. The purpose of this paper is to analyse the impact of these different institutional settings on pay dispersion. The study is carried out using the European Structure of Earnings Survey, which is a large dataset containing detailed matched employer-employee information for the year 1995. The countries analysed are Italy, Belgium and Spain. The empirical results generally show that wages of workers covered by only a 'multi-employer' contract are no more compressed than those of workers covered by both 'multi-employer' and 'single-employer' contracts. This implies that where workers are not covered by single-employer bargaining, they receive wage supplements paid unilaterally by their employers.