Is there Rent Sharing in Italy? Evidence from Employer-Employee data

Alessia Matano and Paolo Naticchioni

No 11-DEISFOL, Working Papers - Dipartimento di Economia from Dipartimento di Economia, Sapienza University of Rome

Abstract: Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is a robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a “Lester” range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector, macroarea).

Keywords: Rent Sharing; Sorting; Wage; Italy (search for similar items in EconPapers)
JEL-codes: C33 J31 J41 L25 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011, Revised 2011
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Is There Rent Sharing in Italy? Evidence from Employer-Employee Data (2011)
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