Interaction Between Underground Employment and Unions in Selected Italian Industries

Revue économique, Forthcoming

Posted: 5 Aug 2009

See all articles by Bruno Chiarini

Bruno Chiarini

University of Naples, Parthenope

Elisabetta Marzano

University of Naples Parthenope - Department of Economic Studies (DES)

Date Written: September 1, 2009

Abstract

In this paper we investigated empirically the nature of the relation between underground employment and unions in Italy, focusing on certain productive sectors. The motivation for this analysis is the hypothesis of the existence of two different opposite channels through which unions affect underground employment: a macro-effect, generating shadow activities via higher wages and market rigidities; a micro-effect, entailing a negative impact of trade union power on underground employment. We consider two different measures of the bargaining power of trade unions, i.e. wages and net density. Econometric analysis of Italian data yields three main results. First, mechanisms of interaction between underground employment and unions change profoundly according to the nature of the industry. Second, the two indexes of the trade unions’ bargaining power play a different role vis-à-vis the extent of underground employment. Third, there is a counter-intuitive interaction between wage and underground employment, which may be explained in an insider-outsider framework.

Keywords: underground economy, trade union power

JEL Classification: E26, J51, C32

Suggested Citation

Chiarini, Bruno and Marzano, Elisabetta, Interaction Between Underground Employment and Unions in Selected Italian Industries (September 1, 2009). Revue économique, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1443809

Bruno Chiarini

University of Naples, Parthenope ( email )

Via Generale Parisi 13
Napoli, 80133
Italy

Elisabetta Marzano (Contact Author)

University of Naples Parthenope - Department of Economic Studies (DES) ( email )

via Medina 40
Naples, 80133
Italy

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