Rent Sharing in Wage Determination: Evidence from Italy

Chiara Strozzi () and Barbara Pistoresi

No 2939, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper presents a two-stage bargaining framework which reproduces the key features of the Italian bargaining system, where wage negotiations occur first at the industry and then at the firm level. The framework we propose takes into account the presence of different degrees of union bargaining power at the two levels of wage negotiations, thus generating a potential distinction between the extent of rent sharing in centralized and in decentralized collective agreements. On the basis of this distinction, the Paper focuses on the study of rent sharing in the Italian basic metal industry by analysing separately what occurs at each of the two bargaining stages. In particular, by estimating a dynamic factor model and by measuring the dynamic correlation between wage and labour productivity, we evaluate how, through the bargaining process, aggregate and idiosyncratic productivity shocks influence respectively centralized and decentralized wage negotiations. It turns out that while centralized agreements generate rent sharing, at the decentralized bargaining level union power is absent.

Keywords: Two-stage bargaining; Rent sharing; Dynamic factor model; Dynamic correlation analysis (search for similar items in EconPapers)
JEL-codes: C10 J50 (search for similar items in EconPapers)
Date: 2001-09
References: Add references at CitEc
Citations: View citations in EconPapers (4)

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