Seminar in Empirical Microeconomics - Opting Out of Centralized Collective Bargaining: Evidence from Italy
Time
Thursday, 24. October 2024
12:00 - 13:15
Location
G308
Organizer
Chair of Economic Policy
Speaker:
Chiara Lacava (Goethe University Frankfurt)
Opting Out of Centralized Collective Bargaining: Evidence from Italy
(joint with Christian Dustmann, Chiara Giannetto, Lorenzo Incoronato, Vincenzo Pezone, Raffaele Saggio and Benjamin Schoefer)
Abstract: We estimate the effects of employers’ opting out of heavily centralized collective bargaining agreements. Our analysis studies two emerging cracks in the rigid system in Italy, where all employers are mandated to pay occupation-specific wage floors specified in national agreements. First, we study the coordinated opt-out by large retailers from their employer association in 2011. Second, we examine the emerging loophole of individual employers evading into lower-wage “pirate agreements.” Merging contract data to matched employer-employee data, we implement a harmonized matched event-study design for both events. Our results show that workers whose employer opts out experience wage losses—and a higher employment probability. On average, our evidence is consistent with the competitiveness hypothesis of opting out, and with the presence of rationed labor supply in Italy, whereby wage cuts raise employment, at least at the level of the individual employer that opts out.