Decreasing Wage Inequality in Italy: The Role of Supply and Demand for Education

Paolo Naticchioni and Andrea Ricci ()
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Andrea Ricci: Univ. of Cassino, Univ. of Rome “La Sapienza”, CeLEG (LUISS-Rome) and ISFOL.

No 9-DEISFOL, Working Papers - Dipartimento di Economia from Dipartimento di Economia, Sapienza University of Rome

Abstract: In this paper we show that wage inequality decreased in the Italian private sector, both in the upper and in the lower tail of the distribution, in the period 1993-2006. By applying a quantile decomposition procedure we find that the decrease of the 90/50 ratio is almost totally related to a negative coefficients component. As for the reduction of the 50/10 ratio, the quantile decomposition shows that it can be related to both the negative coefficients component and the residual component. We claim that that supply-demand interactions have to be considered as the main explanation for the falling educational wage premia that represent the driving force of the falling 90/50 ratio. The reduction of the 50/10 ratio can be instead associated to the changes in the residual component -related to compositional effects-, to the changes in the occupation distribution and to changes in tax regimes.

Keywords: Inequality; Educational Wage Premia; Quantile Decomposition; Supply-Demand of Education; Italy (search for similar items in EconPapers)
JEL-codes: J24 J31 O3 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2009, Revised 2009
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Working Paper: Decreasing Wage Inequality in Italy: The Role of Supply and Demand for Education (2010)
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