Working papers:

“Better Workers Move to Better Firms: A Simple Test of Identify Sorting” NEW

with Cristian Bartolucci, January 2012.

Abstract:

Measuring assortative matching in the labor market has proved quantitatively difficult, specially because firms’ and workers’ types are generally unobserved. In this paper, we propose to use workers’ mobility to identify the direction and strength of assortative matching. In the presence of positive (negative) assortative matching we should observe that good workers are more (less) likely to move to better firms than bad workers. As this simple test only requires that agents can be ranked according to their underlying types, cardinal measures of types are not necessary. We assume that agents’ payoffs are partially monotone on their types. This allows us to use within-firm variation on wages to order workers according to their types. Firm-level profits are instead used to rank firms. We then exploit panel data that combine administrative earnings records for individual employees with detailed balance sheet data for their employers in the Veneto region of Italy. We find remarkably robust evidence that positive assortative matching is a pervasive phenomenon in the labor market. Better workers are found to have higher probability of moving to better firms.

Rent-sharing, holdup and wages: Evidence from matched employer-employee data

(with David Card and Agata Maida). NBER WORKING PAPER SERIES, no. 16192. Submitted.

Abstract:

When wage contracts are relatively short-lived, rent sharing may reduce the incentives for investment since some of the returns to sunk capital are captured by workers. This holdup phenomenon has been blamed for the decline of unionized firms in countries with decentralized bargaining. In this paper we use a matched data set from the Veneto region of Italy that combines Social Security earnings records for employees with detailed financial information for employers to measure the degree of rent sharing and test for holdup. We estimate wage models with job match effects, allowing us to abstract from permanent differences in productivity across workers, firms, and job matches. We also compare OLS and instrumental variables specifications that use sales of firms in other regions of the country to instrument value-added per worker. We find strong evidence of rent-sharing, with a “Lester range” of variation in wages between profitable and unprofitable firms of 15-20%. On the other hand we find little evidence that bargaining lowers the return to investment. Instead, firm-level bargaining in Veneto appears to split the rents after deducting the full cost of capital. Our findings are consistent with a dynamic bargaining model (Crawford, 1988) in which workers pay up front for the returns to sunk capital they will capture in later periods.

The Dynamics and Persistence of Poverty: Evidence from Italy

(with Valentina Gualtieri and Mariacristina Rossi). Revised version. Carlo Alberto Notebooks, No. 173, 2010. Forthcoming, Bulletin of economic Research..

Abstract:

This article studies the dynamics and persistence of poverty in Italy during the nineties, using the ECHP (1994-2001). Two definitions of poverty are analyzed in parallel, income poverty and a multidimensional index of life-style deprivation. For both definitions, poverty exit and re-entry rates are estimated and combined to compute measures of poverty persistence over multiple spells. A picture of high poverty turnover emerges according to either definition of poverty. The results of the multivariate hazard rate models highlight the weaknesses of the Italian labour market, the insufficiencies of the existing social security system and the deep territorial dualism in generating persistent poverty for certain groups of the population. We have stressed the ability of the two approaches to provide a consistent characterization of the dynamics and persistence of poverty and of the identify of the groups at greater risks of persistent poverty.

“Human Capital accumulation in Temporary Jobs: Specific or General?”

(with Fabio Berton and Lia Pacelli).

Abstract:

Following Becker’s theory of human capital we expect temporary workers to accumulate more general human capital than workers holding an open-ended contract. This should result in temporary

workers having a relatively higher probability to change job across different occupations and economic sectors, or, from another perspective, to make external careers.

Labor market reforms of the last twenty years, the debate on flexicurity and the parallel idea of «security in the labor market» instead of «security on the job» rest also on this hypothesis.

Using a sample of entrants in the Italian labor market in the period 1998 – 2002 and using the sector at two digits for blue collars employed in the manufacture or constructions to approximate

the occupation we find that this hypothesis holds, at least during the very first months of unemployment.

Work In Progress:

- “The demand for Temporary Contracts: Evidence from Italian Firms”, with A. Ricci and P. Naticchioni.

- “Temporary contracts and workers’ welfare in Italy: Evidence from a random effect multi-state multi-spell dynamic model”, (with F. Berton and L. Pacelli).

- “The Evolution of Wage Inequality in Italy, 1990-2002”, (with D. Card and A. Maida).

- “Wage rigidity and collective contracts in Italy”, (with A. Maida e P. Sestito).