Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms

Centro Studi Luca d'Agliano Development Studies Working Paper No. 177-2003

34 Pages Posted: 1 Feb 2004

See all articles by Paolo Manasse

Paolo Manasse

Università degli Studi di Bologna - Department of Economics; IGIER, Bocconi University; International Monetary Fund (IMF) - Fiscal Affairs Department

Luca Stanca

University of Milan, Bicocca - Department of Economics; Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS); Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2003

Abstract

This paper presents firm-level evidence on the dynamics of the relative demand for non-manual workers in Italian manufacturing during the 1990s. The analysis provides a number of interesting results. First, within-firm skill upgrading is the main determinant of the increase in the non-manual wage bill share. By contrast, demand changes associated to trade have shifted employment away from skill-intensive firms. Second, while the relative number of hours worked by skilled workers within firms has risen, the hourly wage premium has fallen. Third, within-firm skill upgrading is strongly and significantly related to investment in computers and R&D, suggesting skill-biased technical progress as the main explanation for the increase in the relative demand for non-manual workers. Finally, the paper shows that failing to disaggregate annual wages into the number of hours worked and hourly wages, leads to underestimate the skill-bias of technical progress.

Keywords: Wage differentials, skill bias, technical progress, globalization

JEL Classification: F1, F16, J31, O3

Suggested Citation

Manasse, Paolo and Stanca, Luca, Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms (November 2003). Centro Studi Luca d'Agliano Development Studies Working Paper No. 177-2003. Available at SSRN: https://ssrn.com/abstract=490502 or http://dx.doi.org/10.2139/ssrn.490502

Paolo Manasse (Contact Author)

Università degli Studi di Bologna - Department of Economics ( email )

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I-40125 Bologna
Italy
+39 05 1209 2613 (Phone)

IGIER, Bocconi University

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+39 02 5836 3326 (Phone)

International Monetary Fund (IMF) - Fiscal Affairs Department ( email )

700 19th Street, NW
Washington, DC 20431
United States

Luca Stanca

University of Milan, Bicocca - Department of Economics ( email )

Piazza dell'Ateneo, Nuovo I
Milan 20126
Italy

Università degli Studi di Milano-Bicocca - Center for Interdisciplinary Studies in Economics, Psychology & Social Sciences (CISEPS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milano, 20126
Italy

Università degli Studi di Milano-Bicocca - Department of Economics, Management and Statistics (DEMS) ( email )

Piazza dell'Ateneo Nuovo, 1
Milan, 20126
Italy

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