Urban Wage Premia, Cost of Living, and Collective Bargaining

70 Pages Posted: 31 Oct 2018

See all articles by Marianna Belloc

Marianna Belloc

Sapienza University of Rome - Department of Economics

Paolo Naticchioni

University of Rome I; University of Cassino

Claudia Vittori

University of Rome La Sapienza

Date Written: 2018

Abstract

In this paper, we estimate the urban wage premia (UWP) in Italy, with its economy characterized by the interplay between collective bargaining and spatial heterogeneity in the cost of living. We implement a reduced-form regression analysis using both nominal and real (in temporal and spatial terms) wages. Our dataset for the 2005-2015 period includes, for workers’ characteristics, unique administrative data provided by Italian Social Security Institute and, for the local CPI computation, housing prices collected by Italian Revenue Agency. For employees covered by collective bargaining, we find a zero UWP in nominal terms and a negative and non-negligible UWP in real terms (-5%). To capture the role played by centralized wage settings, we also consider various groups of self-employed workers, who are not covered by national labour agreements, while living in the same locations and enjoying the same amenities as employees. We find that the UWP for self-employed workers are up to 25 times greater than for employees. Moreover, sorting proves more notable in the case of self-employed workers, i.e. the larger UWP provide the higher incentives for high-skilled individuals and better firms to locate in cities. Our findings are confirmed on extending the analysis along the wage distribution.

Keywords: urban wage premium, cost of living, collective bargaining

JEL Classification: R120, R310, J310

Suggested Citation

Belloc, Marianna and Naticchioni, Paolo and Vittori, Claudia, Urban Wage Premia, Cost of Living, and Collective Bargaining (2018). CESifo Working Paper No. 7253. Available at SSRN: https://ssrn.com/abstract=3275427

Marianna Belloc (Contact Author)

Sapienza University of Rome - Department of Economics ( email )

Via del Castro Laurenziano 9
Rome, 00161
Italy

Paolo Naticchioni

University of Rome I ( email )

Piazzale Aldo Moro 5
Roma, Rome 00185
Italy

University of Cassino ( email )

Cassino
Italy

Claudia Vittori

University of Rome La Sapienza ( email )

Via del Castro Laurenziano
Roma, Rome 00161
Italy

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