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The Influence of Sectoral Minimum Wages on School Enrollment and Educational Choices: Evidence From Italy in the 1960s-1980s

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Abstract

Do minimum wages influence post-compulsory school enrollment and educational choices? This paper studies the effect of sectorally-bargained minimum wages using a quasi-natural historical experiment from Italy around 1969, when labour unions obtained steep wage raises for manufacturing workers. Italy’s weakly-selective educational system—whereby students choose specialist educational curricula at age fourteen—allows to separately identify the impact on enrollment from that on educational choices. Absent microdata for the period under study, I present original estimates of education and labour-market variables at the province level with annual frequency between 1962 and 1982. Exploiting exogenous spatial variation in the intensity of the minimum wage hike between provinces with an instrumental variable approach and flexible Difference-in-Differences, I find a temporary increase in early school leaving and a permanent substitution away from vocational schools preparing for manufacturing jobs. The length of the adjustment might have caused a significant long-term loss for Italy’s human capital stock.

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  • Andrea Ramazzotti, 2024. "The Influence of Sectoral Minimum Wages on School Enrollment and Educational Choices: Evidence From Italy in the 1960s-1980s," CSEF Working Papers 717, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy.
    • Handle: RePEc:sef:csefwp:717
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    Keywords

    Wage Differentials; Education; Schooling; Economic History: Europe post-1913.;
    All these keywords.

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • N34 - Economic History - - Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy - - - Europe: 1913-

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