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The Effects of Unions on Wage Inequality: The Italian Case in the 1990s

Daniele Checchi () and Laura Pagani

No 1385, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper we analyse the contribution of union activity to reducing earnings inequality. Given the specific nature of the system of industrial relations, Italian unions may contribute to inequality reduction through either national bargaining (i.e. reducing between-sector differentials) and/or local bargaining (i.e. reducing within-establishment inequality). After reviewing aggregate evidence on the first dimension, we explore the second route making use of matched employer-employees data-set, surveyed in 1995 by Eurostat. We pay great care to the potential endogeneity of local bargaining, and we find that the widespread adoption of local bargaining, by reducing the implicit price of individual characteristics, effectively contributes to inequality reduction.

Keywords: wage inequality; unions (search for similar items in EconPapers)
JEL-codes: J31 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2004-11
New Economics Papers: this item is included in nep-bec and nep-eec
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Published in: Politica Economica, 2005, 1, 41-68

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