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Employer cooperation, productivity and wages: new evidence from inter‐firm formal network agreements

Author

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  • Francesco Devicienti
  • Elena Grinza
  • Alessandro Manello
  • Davide Vannoni

Abstract

Using uniquely rich administrative matched employer–employee data for Italy from 2008 to 2018, we investigate the impact of firms' formal network agreements (FNAs) on firm performance and employee wages. We find an overall significant and economically relevant positive effect of FNAs on various measures of firm performance, but there are no tangible benefits for the workers, and wages decrease slightly, on average. There is, however, marked heterogeneity in the impact on both firms and workers. Estimated rent‐sharing equations, as well as other tests that exploit unionization data, suggest that the negative effects on wages can be explained by a decrease in workers' bargaining power following the introduction of FNAs.

Suggested Citation

  • Francesco Devicienti & Elena Grinza & Alessandro Manello & Davide Vannoni, 2025. "Employer cooperation, productivity and wages: new evidence from inter‐firm formal network agreements," Economica, London School of Economics and Political Science, vol. 92(365), pages 1-41, January.
    • Handle: RePEc:bla:econom:v:92:y:2025:i:365:p:1-41
    DOI: 10.1111/ecca.12553
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    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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