Formal and Informal Assets in the Italian Labour Market

Francesca Borgonovi (), Daniele Checchi () and Valentina Gualtieri ()
Additional contact information
Francesca Borgonovi: OECD
Daniele Checchi: University of Milan
Valentina Gualtieri: INAPP – Institute for Public Policy Analysis

No 18355, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper estimates labour-market returns to formal and informal human capital in Italy using data from the first cycle of PIAAC. We distinguish formal inputs (years of schooling) from directly assessed skills (literacy and numeracy) which we interpret as distinct forms of human capital that are shaped by school quality and by non-formal and informal learning. To address non-random employment and joint endogeneity of schooling and skills, we combine a Heckman selection model with instrumental variables. Schooling is instrumented using cohort exposure to the 1971 introduction of full-day primary schooling and the 1999–2001 Bologna ‘3+2’ university reform; skills are instrumented using gender- and cohort-specific municipal illiteracy rates from population censuses, matched by birthplace. Results show that ignoring selection and endogeneity overstates the returns to schooling. After correction, numeracy yields the main wage premium, while formal credentials contribute little once skills are accounted for. The findings highlight the role of early cultural environments and skill accumulation for Italian wage inequality in Italy.

Keywords: credentials; schooling; skill; Italy (search for similar items in EconPapers)
JEL-codes: I26 J24 (search for similar items in EconPapers)
Date: 2025-12
New Economics Papers: this item is included in nep-edu and nep-lma
References: Add references at CitEc
Citations:

Downloads: (external link)
https://docs.iza.org/dp18355.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp18355

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().