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Wages and competencies. An Econometric Investigation in the Italian manufacturing industry

The main purpose of this thesis is to analyse the interaction between wages and competencies in the Italian manufacturing industry. Many problems of the Italian economy are related with a stationary, if not decreasing, productivity. The level of wages affects not only the efficiency of the economic system, but also equity between several social groups, unemployment, inflation rate and consumption levels. In the ‘new-economy’, ‘competency-based’ wage-setting systems have beneficial effects on employees, employers, and the overall economic system. Nonetheless, only few firms in Italy formally adopt ‘pay-for-competence’ wage-setting mechanisms, and little is known regarding the most productive competencies and the ones most paid by the market.
The international literature has widely discussed the cause-effect relationships among education, ‘on-the-job’ training, ‘hard’ and ‘soft’ competencies, ICT competencies, ‘key’ competencies, managerial quality, organizational innovation, and wages. And many other variables affecting wages contribute to develop a theoretical framework that allows to study wages and their determinants. The Italian labour market and its contracts have some country-specific peculiarities mainly due to the national and decentralized bargaining process between employers and unions. A study of wages in the Italian manufacturing industry must take into account these institutional peculiarities.
This thesis employs an innovative database encompassing information regarding ‘expressed’ and ICT workers’ competencies. Cross-section data belong to a national survey realized by the Italian institute for the development of vocational training of workers (ISFOL) in 2004. The hedonic wage function allows controlling for several features (characteristics of the company, of the respondent, and of the job position), and it is estimated with weighted OLS, checking for heteroscedasticity. Endogeneity is tested with 2SLS and GMM estimators. The purpose of the econometric investigation is to understand whether more skilled workers are more rewarded within the same industry and occupation, and other factors being equal.
Results suggest that employers pay higher wages to workers with a positive competency differential; and, at the same time, they pay lower wages to those with a negative competency differential, even though this wage heterogeneity is not formally recognized by labour contracts. In particular, it is not the absolute level of competencies to be rewarded, but the difference between the competencies of single workers and the average level of competencies of their competitors.
Moreover, ICT competencies are likely to require time before becoming productive and paid by the market. Or, vice versa, they are gradually loosing their wage premium during the evolution of the ‘new economy’. Another possible explanation is that some ‘expressed’ competencies might hide the remuneration of ICT ones. However, only panel data would allow studying ICT competencies over time, and to find a final solution to endogeneity problems.
Some implications of economic policy follow from empirical results. Firstly, wage-setting systems should increasingly consider the role of competencies. Secondly, the educational system should focus on the development of the most productive competencies. And results of this investigation seem to support the idea that overall ‘expressed’ competencies are the most productive, rather than ICT ones.

Mostra/Nascondi contenuto.
1 1. Introduction Italy and some other European countries are facing a long and painful economic crisis. Several reasons have been attributed to the actual situation: the global economic slowdown and the massive public debt are among the most accredited. And Italian policy makers focus their attention on structural inefficiencies to overcome the crisis, such as poor competition on the market. Particular attention is regarded to the labour market, often ascribed to be the source of all evil. Rigidities on the labour market are considered to seriously weaken the Italian competitive strength. Opinions of the common man usually neglect the impact of several reforms that from the late nineties have gradually made more flexible the Italian labour market (OECD 2004). And they also ignore that the employment protection legislation in Italy is lower than the one of Germany (OECD 2012). So that attention is often diverted from the most stringent problems. Some Italian structural negative externalities cannot be denied: poor infrastructures, high taxation, heavy bureaucracy, bribery, inefficient judicial system and weak institutions. Also the labour market requires some reforms, but greater attention should be granted to productivity, rather than to labour market flexibility. Indeed Italian productivity is low compared with the one of its main competitors, and stationary if not decreasing (OECD 2012). And Italian poor performance in terms of productivity is not due to low working time; conversely OECD (2012) statistics reveals that Italians work 370 hours more than Germans every year on average. Thus economic policies should be directed to increase the efficiency of every single worked hour, even though it is worth noting that productivity gains are likely not to stem from higher capital intensity, but from a more efficient human resource management. And also income policies should focus their attention primarily to the role of productivity. Wages are critical for workers’ motivation, for the learning of new competencies, and consequently for labour productivity. Wages are a very powerful transmission mechanism that affects levels of unemployment, consumption and inflation. And they deeply influence also the balance between equity and efficiency within the economy. Thus wage-setting systems should

Laurea liv.II (specialistica)

Facoltà: Economia

Autore: Filippo Albertoni Contatta »

Composta da 137 pagine.


Questa tesi ha raggiunto 27 click dal 23/07/2014.

Disponibile in PDF, la consultazione è esclusivamente in formato digitale.