The increase in earnings inequality and volatility in Italy: the role and persistence of atypical contracts

Domenico Depalo and Salvatore Lattanzio

No 801, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area

Abstract: This paper investigates earnings inequality in Italy between 1990 and 2021 using administrative matched employer-employee data from the Italian Social Security Institute (INPS). It shows that the inequality and volatility of annual earnings have risen steadily over time according to various measures, such as the Gini index, the interquartile ranges, and the variance. It also explores the mechanisms behind this increase, showing that the rise in inequality was driven by the number of weeks worked per year, which varied heterogeneously across workers, as atypical contracts (e.g. part-time and fixed-term) became widespread in the economy. We compare these measures based on the annual compensation of workers with those based on full-time equivalent weekly wages, which display a much less dispersed evolution over time, except during the double-dip recession of 2008-2012. Finally, we document a high degree of persistence, increasing over time, in atypical contracts both in the short and in the long term.

Keywords: earnings; wages; inequality; volatility; labour contracts (search for similar items in EconPapers)
JEL-codes: D63 J21 J24 J31 J41 J62 (search for similar items in EconPapers)
Date: 2023-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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