Turning a blind eye? Compliance to minimum wages and employment

Arbeitspapier

In this paper, we explore the relationship between non-compliance with bargained minimum wages and employment. We illustrate the role of labour courts with respect to the Constitutional provision of "fair" wage and sketch a model in which firms choose their desired levels of employment and non-compliance. We show that when employers internalize the expected costs of non-compliance, the effect of deviating from the bargained minimum wages on employment levels are modest, or null. Using data from the Italian LFS, we find evidence of a positive, but small, trade-off between non-compliance and employment. We discuss the policy implications of these findings for wage bargaining, also considering the costs that "turning a blind eye" to non-compliance implies for the Italian system of industrial relations.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Working Paper ; No. 85

Classification and Topics

• Classification: Wirtschaft ; Labor Economics Policies ; Wage Level and Structure; Wage Differentials ; Dispute Resolution: Strikes, Arbitration, and Mediation; Collective Bargaining ; Labor Standards: Workers' Rights
• Subject: Collective bargaining ; sectoral minimum wages ; compliance

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Garnero, Andrea ; Lucifora, Claudio
• Event: Veröffentlichung
• (who): Università Cattolica del Sacro Cuore, Dipartimento di Economia e Finanza (DISCE)
• (where): Milano
• (when): 2020

Further information

• Handle: http://hdl.handle.net/10419/225057
• Last update: 10.03.2025, 11:42 AM CET