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The Age Pay Gap between Young and Older Employees in Italy: Perceived or Real Discrimination against the Young?

In: Change at Home, in the Labor Market, and On the Job

Author

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  • Carolina Castagnetti
  • Luisa Rosti
  • Marina Töpfer

Abstract

This paper analyzes the age pay gap in Italy (22%), particularly as it is of interest in an aging society and as it may affect social cohesion. Instead of the traditional approach for model selection, we use a machine-learning approach (post double robust Least Absolute Shrinkage Operator [LASSO]). This approach allows us to reduce Omitted Variable Bias (OVB), given data restrictions, and to obtain a robust estimate of the conditional age pay gap. We then decompose the conditional gap and analyze the impact of four further potential sources of heterogeneity (workers', sectors', and occupations' permanent heterogeneity as well as sample selection bias). The results suggest that age discrimination in pay is only perceived but not real in Italy for both men and women.

Suggested Citation

  • Carolina Castagnetti & Luisa Rosti & Marina Töpfer, 2020. "The Age Pay Gap between Young and Older Employees in Italy: Perceived or Real Discrimination against the Young?," Research in Labor Economics, in: Change at Home, in the Labor Market, and On the Job, volume 48, pages 195-221, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:rleczz:s0147-912120200000048006
    DOI: 10.1108/S0147-912120200000048006
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    More about this item

    Keywords

    Age pay gap; perceived discrimination; machine learning; Italian labour market; omitted variable bias; Oaxaca-Blinder decomposition; J01; J31; J71;
    All these keywords.

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J71 - Labor and Demographic Economics - - Labor Discrimination - - - Hiring and Firing

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