Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy

34 Pages Posted: 9 Jul 2007

See all articles by Carlo Dell'Aringa

Carlo Dell'Aringa

Catholic University of the Sacred Heart of Milan

Claudio Lucifora

Università Cattolica del Sacro Cuore di Milano ; IZA Institute of Labor Economics

Federica Origo

University of Bergamo

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Abstract

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.

Suggested Citation

Dell'Aringa, Carlo and Lucifora, Claudio and Origo, Federica, Public Sector Pay and Regional Competitiveness: A First Look at Regional Public-Private Wage Differentials in Italy. Manchester School, Vol. 75, No. 4, pp. 445-478, July 2007. Available at SSRN: https://ssrn.com/abstract=998655 or http://dx.doi.org/10.1111/j.1467-9957.2007.01025.x

Carlo Dell'Aringa (Contact Author)

Catholic University of the Sacred Heart of Milan ( email )

Istituto di Economia dell'Impresa e del Lavoro
20123 Milano
Italy

Claudio Lucifora

Università Cattolica del Sacro Cuore di Milano ( email )

Department of Economics and Finance
Largo Gemelli, 1
20123 Milano
Italy
+39 027 234 2525 (Phone)
+39 027 234 2781 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Federica Origo

University of Bergamo ( email )

Via Salvecchio, 19
Bergamo, 24129
Italy

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