A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked feature of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the Italian collectively-bargained minimum wage system, which is based on a two-tier structure, whereby the first tier entails setting minimum wages at the national contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that, on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increases in the share of unskilled workers employed in the contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers.

The institutional wage adjustment to import competition. Evidence from the italian collective bargaining system

Alessia Matano;
2022

Abstract

A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked feature of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the Italian collectively-bargained minimum wage system, which is based on a two-tier structure, whereby the first tier entails setting minimum wages at the national contract level. Using an instrumental variable strategy and exploiting variations in contract-level exposure to trade, we find for the 1995-2003 period that, on average, the surge in imports decreased contractual minimum wages by 1.5%. This impact increases in the share of unskilled workers employed in the contract. This negative institutional effect contrasts with a nonsignificant effect of trade on total wages, with the latter becoming positive and large only for highly skilled workers.
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/11573/1652474
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