The Institutional Adjustment Margin to Import Competition: Evidence from Italian Minimum Wages

Arbeitspapier

A growing body of research has contributed to understanding the labor market and political effects of globalization. This paper explores an overlooked aspect of trade-induced adjustments in the labor market: the institutional aspect. We take advantage of the two-tier collective bargaining structure of the Italian labor market, whereby the first tier entails setting minimum wages at the 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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 12714

Classification and Topics

• Classification: Wirtschaft ; Labor-Management Relations, Trade Unions, and Collective Bargaining: General ; Trade and Labor Market Interactions ; Wage Level and Structure; Wage Differentials ; Human Capital; Skills; Occupational Choice; Labor Productivity
• Subject: bargained minimum wages ; import competition ; labor market institutions ; skills

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Matano, Alessia ; Naticchioni, Paolo ; Vona, Francesco
• Event: Veröffentlichung
• (who): Institute of Labor Economics (IZA)
• (where): Bonn
• (when): 2019

Further information

• Handle: http://hdl.handle.net/10419/207538
• Last update: 10.03.2025, 11:44 AM CET