Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces

Tito Boeri, Andrea Ichino, Enrico Moretti and Johanna Posch

No 25612, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Italy and Germany have similar geographical differences in productivity – North more productive than South in Italy; West more productive than East in Germany – but have adopted different models of wage bargaining. Italy sets wages based on nationwide contracts that allow for limited local wage adjustments, while Germany has moved toward a more flexible system that allows for local bargaining. The Italian system has significant costs in terms of forgone aggregate earnings and employment because it generates a spatial equilibrium where workers queue for jobs in the South and remain unemployed while waiting. Our findings are relevant for other European countries.

JEL-codes: J0 R1 (search for similar items in EconPapers)
Date: 2019-02
New Economics Papers: this item is included in nep-eec, nep-geo and nep-ure
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Citations: View citations in EconPapers (37)

Published as Tito Boeri & Andrea Ichino & Enrico Moretti & Johanna Posch, 2021. "Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces," Journal of the European Economic Association, vol 19(6), pages 3249-3292.

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Journal Article: Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces (2021)
Working Paper: Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces (2019)
Working Paper: Wage Equalization and Regional Misallocation: Evidence from Italian and German Provinces (2019)
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