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Exchange-rate policy, institutions and wages: A macroeconomic quasi-experiment from Italy, 1997–2000

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  • Andini, Corrado

Abstract

This paper performs a macroeconomic quasi-experiment with individual data to study how the fixed exchange-rate policy implemented in Italy between 1997 and 2000, by itself or in combination with the institutional setting, affected the growth rate of real wages among resident workers. Accounting for both observed and unobserved individual characteristics through the Difference-in-Differences estimator, we find that the fixed exchange-rate policy reduced the growth rate of real wages in the private sector, relative to the counterfactual of a flexible exchange-rate policy, which is simulated through comparable micro data from the United Kingdom. Evidence of heterogeneous treatment effects across sectors and industries is also presented.

Suggested Citation

  • Andini, Corrado, 2023. "Exchange-rate policy, institutions and wages: A macroeconomic quasi-experiment from Italy, 1997–2000," International Economics, Elsevier, vol. 175(C), pages 158-170.
    • Handle: RePEc:eee:inteco:v:175:y:2023:i:c:p:158-170
    DOI: 10.1016/j.inteco.2023.07.001
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    More about this item

    Keywords

    Exchange rates; Wages; Difference-in-Differences; Unions;
    All these keywords.

    JEL classification:

    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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