Age Adjustment by Italian Firms: Any Difference During the Crisis? A Survey-Based Analysis

29 Pages Posted: 7 Dec 2011

Date Written: June 15, 2011

Abstract

The study analyses wage adjustment by Italian firms on the basis of information collected through a coordinated survey carried out in 17 European countries in two waves (at the beginning of 2008 and in the summer of 2009). The pre-crisis evidence indicates that the degree of wage rigidity is relatively high in Italy: wages remain unchanged on average for about two years, against an average of just over one year in the other countries. Italian firms hardly cut nominal wages, reflecting not only institutional constraints, but also an attempt to avoid a negative impact on their productivity. During the economic recession the firms most severely affected by the fall in demand reduced their costs mainly by adjusting the input of labor (in terms of both employment and hours worked). A higher incidence of skilled and white-collar workers was accompanied by greater recourse to strategies aimed at containing non-labor costs, presumably in order to preserve the human capital accumulated.

Keywords: survey, wage rigidity, economic recession

JEL Classification: D21, E30, J31

Suggested Citation

Fabiani, Silvia and Sabbatini, Roberto, Age Adjustment by Italian Firms: Any Difference During the Crisis? A Survey-Based Analysis (June 15, 2011). Bank of Italy Occasional Paper No. 94. Available at SSRN: https://ssrn.com/abstract=1968911 or http://dx.doi.org/10.2139/ssrn.1968911

Silvia Fabiani

Bank of Italy ( email )

Via Nazionale 91
Rome, 00184
Italy

Roberto Sabbatini (Contact Author)

Bank of Italy ( email )

Via Nazionale 91
00184 Roma
Italy

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