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Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms

Paolo Manasse () and Luca Stanca ()

No 177, Development Working Papers from Centro Studi Luca d'Agliano, University of Milano

Abstract: This paper presents firm- level evidence on the dynamics of the relative demand for non-manual workers in Italian manufacturing during the 1990s. The analysis provides a number of interesting results. First, within-firm skill upgrading is the main determinant of the increase in the non-manual wage bill share. By contrast, demand changes associated to trade have shifted employment away from skill-intensive firms. Second, while the relative number of hours worked by skilled workers within firms has risen, the hourly wage premium has fallen. Third, within-firm skill upgrading is strongly and significantly related to investment in computers and R&D, suggesting skill-biased technical progress as the main explanation for the increase in the relative demand for non-manual workers. Finally, the paper shows that failing to disaggregate annual wages into the number of hours worked and hourly wages, leads to underestimate the skill-bias of technical progress.

Keywords: wage differentials; skill bias; technical progress; globalization (search for similar items in EconPapers)
JEL-codes: F1 F16 J31 O3 (search for similar items in EconPapers)
Date: 2003-12-01
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Working Paper: Working on the Train? The role of technical Progress and the Trade in Explaining Wage Differentials in Italian Firms (2003) Downloads
Working Paper: Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms (2003) Downloads
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