Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy
Catholic University of the Sacred Heart of Milan
Università Cattolica del Sacro Cuore di Milano - Department of Economics; Institute for the Study of Labor (IZA)
University of Bergamo
Manchester School, Vol. 75, No. 4, pp. 445-478, July 2007
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.
Number of Pages in PDF File: 34Accepted Paper Series
Date posted: July 9, 2007
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