Collective Bargaining and the Wage Structure

Lorenzo Cappellari and Bernardo Fanfani

No 26197, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study how updates in pay floors set by collective bargaining agreements (CBAs) shape the wage structure in Italy. We estimate stacked event-panel difference-in-differences models around changes of contractual minima and trace distributional impacts. Pay-floor hikes of 2.2% on average raise mean log FTE daily wages by 2.2%, but effects are near zero at the 10th percentile and stronger at the 90th, implying inequality enhancing wage-rate responses. This asymmetry reflects both within-agreement heterogeneity, as lower-paid workers within CBAs respond less, and between-agreement heterogeneity, as low-wage CBAs exhibit weaker pass-through. Non-compliance with pay floors is higher in low-wage CBAs, thus it is a potential driver of asymmetries even if its level is not affected by wage updates. Pay-floor hikes reduce employment and days worked only among low-wage workers and only among full-time jobs, which may further contribute to the muted wage response in the lower tail through selection mechanisms.

Keywords: collective bargaining; contractual minimum wages; wage structure (search for similar items in EconPapers)
JEL-codes: J31 J38 J51 (search for similar items in EconPapers)
Date: 2026-07
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