Wage Bargaining and Technical Change


Structural Consequences of Egalitarianism

Minimum Wages, Skill Premium and Firm Size in Italy, 1946-1991

This is the first chapter of my PhD thesis. In the thesis, I explore structural changes in the Italian economy after 1950. With a special focus on the ‘long 1968’, I study how social conflict influenced the evolution of the Italian economy in the long run, from different perspectives. The first chapter looks at wage bargaining and technical change.

Abstract

Can wage bargaining influence the direction of technical change? The paper proposes that, by altering the relative cost of job tasks, wage-setting institutions can influence firms’ decisions to adopt skill-intensive production processes. The paper tests this hypothesis by exploring the impact of an egalitarian wage push on technical change and the firm-size distribution in Italy after 1969. Italy’s industry-level collective agreements established minimum wage scales depending on the set of tasks performed on the job and their skill content. The paper shows that an extreme egalitarian compression in minimum wage differentials started in 1969 and continued into the 1980s, modifying the relative cost of job tasks. Exploiting sharp spatial variation in the intensity of the wage compression across three different geographical levels, the paper shows that the egalitarian wage push was associated with an increase in capital intensity, a reduction of blue-collar workers employed, and their concentration in smaller establishment, with significant heterogeneity between sectors.

Presentations

I have presented this research on several occasions, including:

  1. The Economic History Society PhD Thesis Workshop (28-29 June 2021)
  2. The ECEHWeb Seminar (14 June 2021)
  3. The Economic and Business History Conference (18-21 May 2021)
  4. The Economic History Society Annual Conference (16-19 April 2021)
  5. The Oxford Graduate Seminar in Economic and Social History (10 June 2020; early version)