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Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms

Author

Listed:
  • Paolo Manasse

    (University of Bologna, Italy)

  • Luca Stanca

    (University of Milan-Bicocca, Italy)

Abstract

This paper presents firm- level evidence on the dynamics of the relative demand for non-manual workers in Italian manufacturing during the 1990s. The analysis provides a number of interesting results. First, within-firm skill upgrading is the main determinant of the increase in the non-manual wage bill share. By contrast, demand changes associated to trade have shifted employment away from skill-intensive firms. Second, while the relative number of hours worked by skilled workers within firms has risen, the hourly wage premium has fallen. Third, within-firm skill upgrading is strongly and significantly related to investment in computers and R&D, suggesting skill-biased technical progress as the main explanation for the increase in the relative demand for non-manual workers. Finally, the paper shows that failing to disaggregate annual wages into the number of hours worked and hourly wages, leads to underestimate the skill-bias of technical progress.

Suggested Citation

  • Paolo Manasse & Luca Stanca, 2003. "Working on the Train? The Role of Technical Progress and Trade in Explaining Wage Differentials in Italian Firms," Development Working Papers 177, Centro Studi Luca d'Agliano, University of Milano.
    • Handle: RePEc:csl:devewp:177
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    File URL: https://www.dagliano.unimi.it/media/WP2003_177.pdf
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    Cited by:

    1. Susana Iranzo & Fabiano Schivardi & Elisa Tosetti, 2008. "Skill Dispersion and Firm Productivity: An Analysis with Employer-Employee Matched Data," Journal of Labor Economics, University of Chicago Press, vol. 26(2), pages 247-285, April.
    2. Francesco Serti & Chiara Tomasi & Antonello Zanfei, 2007. "Exporters, Importers and Two-way Traders: the Links between Internationalization, Skills and Wages," Working Papers 0713, University of Urbino Carlo Bo, Department of Economics, Society & Politics - Scientific Committee - L. Stefanini & G. Travaglini, revised 2007.
    3. Weijiang Liu & Mingze Du & Yuxin Bai, 2021. "Mechanisms of Environmental Regulation’s Impact on Green Technological Progress—Evidence from China’s Manufacturing Sector," Sustainability, MDPI, vol. 13(4), pages 1-23, February.

    More about this item

    Keywords

    wage differentials; skill bias; technical progress; globalization;
    All these keywords.

    JEL classification:

    • F1 - International Economics - - Trade
    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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