My PhD thesis studies the influence of labour market institutions on human capital accumulation, internal migration and firms’ organisational change in Italy between the 1960s and the 1980s. In the first part of my thesis, I present new series of contractual and effective wages covering 97% of industrial workers from the 1950s to the 1990s, which I have digitized and harmonized from a range of printed primary sources. These series provide greater sectoral, professional and geographical disaggregation than common official statistics, and extend further back in time than available microdata, allowing to test directly the long-run impact of institutional changes. The dataset is augmented with new estimates of school enrolment, unemployment, migration, and a range of control variables at the province level.
The thesis focuses on a sudden shift in labour unions’ approach to collective bargaining, from wage moderation to egalitarianism, which dated to the autumn of 1969 (Erickson and Ichino 1995). The new series show that the choice of egalitarianism caused a steep increase in minimum wage floors established by collective agreements (with an annualized rate of growth of 15% between 1968 and 1980, at constant price values), and a significant compression of the wage distribution, particularly among industrial employees: the skill premium of blue-collar workers decreased by 56% in the same period. The thesis argues that this shift in collective bargaining modified relative factors costs and altered incentives for workers and firms, causing structural misallocations that continue to affect the Italian economy to this day.
In my job market paper (Wage Compression and School Enrolment: The Influence of Collective Agreements on Human Capital Accumulation in Italy, 1960s-1980s), I explore the impact on human capital accumulation, focusing on the educational choices of teenagers with respect to upper secondary education. The paper connects to a growing literature which shows that statutory minimum wages can increase the opportunity cost of staying in school for the marginal student, provided that disemployment effects are not too large. Given that contractually bargained minimum wages are functionally equivalent to statutory minimum wages when they show excessive coverage (Boeri 2012; Garnero, Campelman, Rycx 2015), as was the case in Italy during the 1970s, I test the hypothesis that the egalitarian shift caused an increase in early school leaving. In addition, I argue that the compression of the wage differentials for blue-collar workers reduced the return to specialist education that prepared for high-skill industrial jobs, and I propose that this potential effect can be separately tested thanks to Italy’s tracked educational system, whereby students at age 14 choose between schools offering alternative specialized curricula. For identification purposes, I use both Instrumental Variable and generalized Difference-in-Differences approaches exploiting a contemporary reform of the wage-setting system. I find that the increase in contractual minimum wages is associated with a temporary increase in early school leaving and a permanent decrease in enrolment in vocational schools for manufacturing jobs. In the long run, the drop in enrolment was compensated by a shift in favour of schools preparing for clerical jobs. However, counterfactual scenarios show that the temporary drop in enrolment reduced Italy’s potential capital stock by up to 2.5 million graduates, which explain 44% of Italy’s current lag in educational attainment with respect to OECD countries.
The second paper (Collective Agreements and Internal Migration: The Effect of Wage Equalization in Italy between the 1960s and the 1970s) tests the effect of the spatial equalization of nominal contractual wages in 1972 on internal migration. Nominal equalization is predicated on fairness grounds, yet research has shown that the resulting spatial differentials in real wages cause extra unemployment in low-income areas, misallocation of production factors and wage rigidity with respect to productivity (Boeri et al. 2021). Having digitized and harmonized migration matrices for Italy’s 92 provinces with annual frequency from 1962 to 1982, I am able to extend this research back in time to the origin of this institutional feature. A gravity model of migration shows that nominal differences in minimum wages were a key driver of internal migration and Difference-in-Differences estimates show that, after the 1972 equalization, migration between provinces that originally had different nominal wages dropped more than between provinces that originally had the same level of nominal wages.
The third paper (Structural Consequences of Egalitarianism. Minimum Wages, Skill Premium and Firm Size in Italy, 1946-1991) explores firms’ reaction to this rise in relative labour costs. Taking inspiration from the latest research on task-biased technical change, I argue that the asymmetric rise in labour costs made low-skill jobs relatively more expensive. Hence, firms reacted by adopting labour-saving machinery, by reducing the share of low-skill workers employed, and by shifting labour-intensive production phases to smaller firms, which could escape unions’ control, enjoy economies of specialisation, or adopt batch-production methods which made use of more skilled workers. To reach these conclusions, I present a quantitative analysis based on newly digitized data from primary statistical sources at multiple levels of geographical detail. The identification strategy hinges on a setup akin to a continuous Diff-in-Diff setting, where variation in treatment is given by exogenous spatial variation in the intensity of the relative wage compression.
Population and Transport in Italy since 1861. Hierarchies, Dynamics, Growth
This project studies the spatial distribution of the Italian population between 1861 and 1991 at a detailed geographical level. Using spatial statistics and empirical regularities in population studies, it identifies a secular trend in population concentration which, starting around 1871 and concluding by 1971, transformed Italy’s rank-size distribution from immature to log-linear. Different phases in the concentration process coincided with different spatial patterns of population growth, and variation is exploited to explain several features of Italy’s economic development. The project also investigates the effect of the construction of the railway network on population distribution at the local level.
To perform the analysis, I have produced the first historical geodatabase of the Italian population at the municipal levels at ten-year intervals, from 1861 to 1991. Including geographical and control variables, the database contains more than 300,000 data points.
This project originated as my master’s dissertation, which I completed under the supervision of Dr. Brian A’Hearn at the University of Oxford. The dissertation has been awarded the Premio Sele d’Oro Mezzogiorno, Sezione Euromed, for best master dissertation.
In 2021 an extended version was published as a monograph (in Italian) by the academic publisher Rubbettino, with the title Il lento avvicinamento. Popolazione, ferrovie e territorio nell’Italia contemporanea.
Developmental Projects in Southern Italy, 1950-1980
I have worked on several aspects of public policies in Southern Italy, including infrastructure investment and agricultural development programmes.
My research on agricultural development programs was published in Italian as A. Ramazzotti, ‘La Cassa per il Mezzogiorno e il miglioramento fondiario attraverso l’esame degli interventi sulle fonti elettroniche e primi risultati di un’analisi empirica,’ in Rivista economica del Mezzogiorno, Trimestrale della Svimez, 4/2017, pp. 1037-1068, doi: 10.1432/90206.
I co-authored a chapter on large businesses in Southern Italy after 1970: F. Pirro and A. Ramazzotti, ‘La persistenza della grande impresa nell’Italia meridionale. Dalla crisi del modello fordista alle nuove politiche industriali,’ in Il risveglio del Mezzogiorno. Nuove politiche per lo sviluppo, edited by G. Coco and A. Lepore (Laterza: Roma-Bari, 2018).
From December 2018 to July 2019 I participated to a research project on structural transformations of the Southern economy since 1980. The project was organised by Astrid and coordinated by G. Coco and C. De Vincenti. The project involved 28 researchers and academics from various institutions. I also authored a chapter, together with S. Palermo and A. Pomella, titled ‘La dinamica della grande impresa tra la fine dell’intervento straordinario e la nuova globalizzazione”. The chapter has been published in Una questione nazionale. Il Mezzogiorno da “problema” a opportunità”, edited by G. Coco and C. De Vincenti (il Mulino: Bologna, 2020).