This introduction provides a survey of the collected papers. At the same time it develops an critical
analysis designed to illustrate the file rouge which links the material included in this special issue.
The theoretical result according to which the wage is higher when bargaining and efficiency
wages interact, is tested by estimating a formally derived wage equation on an Italian firm-level panel
from 1990 to 1999. The 1993 July Agreement, which fostered the adoption of decentralised incentive
mechanisms, is used as a natural experiment. The main results are the following: a) Subsequent the
adoption of the 1993 Agreement, the elasticity of wages to firm profits increases from 2.6 to 3.6%;
the corresponding estimated wage premium is equal to 3.6% of the average wage; b) Relative to the
whole sample of firms, those that signed the decentralised contract show higher wages, more persist-
ent wage dynamics but lower variable wage premia; c) For the same firms, a significant increase of
the rent sharing is obtained through the diffusion of individual incentives and productivity evaluation
procedures; d) a considerable bias is introduced if are not profit endogeneity and unobservable fixed
effects are not accounted for.
The 1993 Income Policy Agreements (concertazione) reformed wage setting institutions in Italy.
This change introduced a relevant ability in absorbing macroeconomic shocks and a curb in inflation-
ary expectations, at the cost of stagnant aggregate real wages. The firm-level wage premia remained
moderate and partially diffused, with an insufficient distribution of productivity gains, especially to
smaller and Southern firms. On the other hand, concertazione between social partners favoured the
spread of flexibility, better and before than regulation. Overall the North-South wage differentials
slightly increased. Nowadays, after a few years of contrasts, Italy should resume concertazione, by
mixing flexibility with a welfare state general reform
The present study uses data for workplaces in all sectors of ten European countries to investigate whether firms that have introduced new forms of work organisation are more likely to use variable pay schemes. Also the role played by institutional forces and employees’ representatives is investigated. New regimes of work organisation are characterised by both new work practices – such as teams, job rotation, multitasking and flat hierarchies – and higher levels of direct participation by employees. We find that, in general, schemes of variable pay are more likely to be introduced where new work practices are in place. The presence of employees’ representatives increases the probability of variable pay, but only when they co-operate with the management in decision-making.
This paper investigates the structure of within-establishment wage inequality in Italy, using linked employer-employee data (European Structure of Earnings Survey). The effect of work organi- sation practices, pay policies, collective bargaining procedures and industrial relations settings are analysed in the context of wage differentials in the firm. The main findings suggest that employees’ characteristics, work organisation practices and firm size are relevant in shaping pay inequality within establishments. Decentralised bargaining is shown to be associated with higher (unconditional) within-establishment wage dispersion; however, when checking both for worker and firm heterogeneity, the association changes sign or is not (statistically) significant. Finally, when the endogenous sorting of establishments is adequately modelled, no causal effect of decentralised bargaining on within-establishment pay inequality is detected.
This paper uses ESES (European Structure of Earnings Survey) data for 1995 in order to investigate
the impact of the Italian bargaining system on regional wage differentials and on local wage dispersion.
The ESES survey is a large matched employer-employee data-set containing a wealth of information
regarding characteristics of both workers and firms. The main findings suggest that in the
south of Italy, in specific conditions, the minimum wages established by national sectoral collective
agreements oblige some firms to pay higher wages than they would have done had there been no national
agreement. In addition, wage dispersion in the south is more compressed for workers covered
than for workers not covered by a national collective agreement. These results can be interpreted as
indirect evidence for the fact that national collective bargaining creates regional «wage floors».
We examine the influence of the 1992 and 1993 wage agreements on the disinflation experienced in Italy through the 1990s, providing econometric estimates both for the reaction function of the Bank of Italy and for 2-digit industry wage equations. We rely on industry-level measures for the degree of indexation, and find that, after the agreements, wage setters became more forward-looking and expectations were to some extent influenced by the target rate of inflation. The relationships between wages and the other main labour market variables were not much affected by the agreements.
This paper estimates the extent of downward wage rigidity in Italy using a micro-econometric model and the recently released WHIP longitudinal data. The econometric approach distinguishes between downward nominal wage rigidity – i.e., the impediment to nominal wage cuts – and downward real wage rigidity – i.e., when nominal wages cannot grow by less than a minimum positive threshold. The model accounts for measurement error and flexibly specifies the counterfactual, rigidity-free wage change distribution. The period analyzed goes from the mid eighties to the end of the century, within which the 1992-1993 income agreements – with the abolition of the scala mobile – are situated. Overall, downward wage rigidity impacts on about 70% of the observations. However, in the periods following the income agreements, the impact of wage rigidity is reduced, in particular with regards to real rigidities (with a slight increase in nominal rigidities). In each sub-period, however, real rigidities prevail over nominal rigidities.
The paper aims at explaining the ineffectiveness of the tripartite social pact of July 1993 (the so-called July Protocol) in fostering growth, further to curbing inflation and favouring employment. In the light of labour productivity dynamics, wage moderation after 1993 appears as a significant wage deflation. In an economy with relevant segments sheltered from international competitiveness, privatisations and wage deflation have combined in favouring rent accumulation; so that, unexpectedly, wage moderation has combined with a sensible competitive loss and with slow growth. Changes in the fundamental relationships among growth, profits, investment and employment show deterioration in the quality of new jobs and an employment-productivity tradeoff, which are discussed with refer- ence to innovation, workplace re-organisation and relational goods accumulation. Within the industrial relations system, major shortcomings can be traced to the poor engagement of social partners in preserving the credibility of the Pact. The concluding recommendations aim at resolving the incompleteness of the Protocol, and helping the Italian economy to enter the «high road» to competitiveness.