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

Paolo Manasse and Luca Stanca

No 242, Working Papers from IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University

Abstract: This paper presents firm-level evidence on the dynamics of the relative demand for non-manufacturing workers in Italian manufacturing during the 1990s. The analysis provides a number of interesting results. First, the rise within firms in the share of non-manual workers in both employment and hours worked (within-firm skill upgrading) is the main determinant of the increase in the relative demand for skilled workers. By contrast, demand changes associated to trade have mitigated such a rise by shifting 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. Fourth, we find that technical progress has raised the relative productivity of skilled workers (the skill-bias of technical progress is positive). Finally we show that the standard approach that measures annual, rather than hourly relative wages, produces a downward bias in the estimate of the skill-bias of technical progress.

Date: 2003
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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)
Working Paper: Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms (2003)
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