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Quality & Quantity

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21.07.2017

Skills and labour incomes: how unequal is Italy as part of the Southern European countries?

verfasst von: Antonio Garofalo, Rosalia Castellano, Gennaro Punzo, Gaetano Musella

Erschienen in: Quality & Quantity | Ausgabe 4/2018

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Abstract

This paper performs a comparative investigation of the effects of the Great Recession on the labour market structure and wage inequality in certain countries in Southern Europe (Greece, Italy, Portugal, and Spain). By exploring the intensity of the decline of middle-skill jobs during the years 2005–2013, which makes it possible to sketch what the labour market structure has set for itself (i.e., job polarisation, upgrading or neither), the objective is to relate these changes to wage inequality and its leading determinants. Through the Recentered Influence Function regression of the Gini index on EU-SILC data, Italy is compared to each selected country in order to evaluate how much of the spatial inequality gap is accounted for by the endowment in employee characteristics (composition effect) rather than the capability of each country’s labour market to reward these characteristics (wage structure) and, second, to identify those factors that are quantitatively more significant in making differentials. In brief, Italy is less unequal than the other Southern European countries. A larger amount of its “inequality advantage” depends on the wage structure. That is, the capacity of the country’s labour market in rewarding individual endowments is more important than the ways in which they are distributed across space.

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Nächster Artikel Class diversification, economic growth and urban sprawl: evidences from a pre-crisis European city

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At a journalistic level, these four troubled and heavily indebted countries of Europe are known by the acronym PIGS. This term, which was popularised during the European sovereign-debt crisis of the late 2000s, was used to indicate the inability of these countries to refinance their government debt or to bail out over-indebted banks on their own during the debt crisis (see, for example, The Independent and BBC News). However, in 2010, the use of this term was curbed because it was viewed as derogatory (see, for example, the Financial Times and Barclays Capital).

More precisely, inside the high-skill jobs, the focus is on: (1) managers and senior officials (including legislators, senior officials, managers, and corporate managers); (2) professionals (including physical, mathematical and engineering science professionals, life science, health, business, legal, and social science professionals; (3) teaching professionals; and (4) technicians and associate professionals. The middle-skill jobs focus on: (1) managers of small enterprises, (2) clerks, and (3) service workers (comprising salespersons and demonstrators, building and extraction trade workers, and metal, machinery, precision, handicraft, printing and related trades workers). Finally, low-skill jobs include: (1) agricultural and fishery workers (with other crafts and related trades personnel); (2) machine operators (including stationary plant operators, assemblers, drivers, and mobile plant operators; and (3) elementary occupations (sales and services, mining, construction, manufacturing, and transport).

Further methodological details about the contribution of a single covariate in the decomposition can be found in Firpo et al. (2007) and Fortin et al. (2011).

Two conditions make it possible to identify the parameters of the counterfactual distribution. First, ignorability, which states that the distribution of the unobserved explanatory variables in the wage determination is the same across groups A and B; second, overlapping support, which requires that there be an overlap in observable characteristics across groups in the sense that there is no covariate such that it is only observed among individuals in group A.

As regards personal characteristics, gender (for the overall model) is a dummy with value 1 if the employee is male and 0 otherwise. Couple is a derived variable based on marital status, which is the conjugal status of each worker in relation to the marriage laws of the country, and consensual union to consider if they live in the same household. In such a way, couple has three modalities, e.g., never married, currently married sharing or not the same house (also legal spouse or registered partner or “de facto” partner), as well as others who have experienced marriage in the past (separated, divorced, widowed). Health is 1 for employees who do not suffer from any chronic illness or condition and 0 otherwise. Education attainment refers to the highest level of formal education (ISCED-97) a person has successfully completed using three categories of low (ISCED-97:0;1;2), medium (3;4), and high (5) education. Experience refers to the number of years since starting the first regular job that a person has spent at work. As regards job characteristics, the variables economic status and type of contract are dummies with value 1 if the employee is full-time (0 if part-time) and with a permanent contract (0 if temporary), respectively. The occupation type is composed of ten dummies; each of them captures a specific professional status (ISCO classification) scaled according to skill level.

For Italy, and exclusively for the year 2005, the gross wage was approximated using gross monthly income, considering the months during which the employee experienced paid employment.

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Titel: Skills and labour incomes: how unequal is Italy as part of the Southern European countries?
verfasst von: Antonio Garofalo
Rosalia Castellano
Gennaro Punzo
Gaetano Musella
Publikationsdatum: 21.07.2017
Verlag: Springer Netherlands
Erschienen in: Quality & Quantity / Ausgabe 4/2018
Print ISSN: 0033-5177
Elektronische ISSN: 1573-7845
DOI: https://doi.org/10.1007/s11135-017-0531-6

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