Skip to main content

Advertisement

SpringerLink
Log in

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

  • Published:
Quality & Quantity Aims and scope Submit manuscript

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.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2

Similar content being viewed by others

Notes

  1. 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).

  2. 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).

  3. 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).

  4. 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.

  5. 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.

  6. 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.

References

  • Acemoglu, D.: Technical change, inequality, and the labor market. J. Econ. Lit. 40, 7–72 (2003)

    Article  Google Scholar 

  • Acemoglu, D., Autor, D.: Skills, tasks and technologies: Implications for employment and earnings. In: Ashenfelter, O., Card, D., (eds.) Handbook of Labor Econ, vol. 4B, pp. 1043–1171. Elsevier (2011)

  • Anghel, B., De La Rica Goiricelaya, S., Lacuesta, A.: The impact of the great recession on employment polarization in Spain. Ser. J. Span. Econ. Assoc. 5(2–3), 143–171 (2013)

    Google Scholar 

  • Ashton, D.N., Green, F.: Education, Training and the Global Economy. Edward Elgar, London (1996)

    Google Scholar 

  • Autor, D.: Outsourcing at will: the contribution of unjust dismissal doctrine to the growth of employment outsourcing. J. Labor Econ. 21(1), 1–42 (2003)

  • Autor, D.: The Polarization of Job Market Opportunities in the US. Center for American Progress, Washington, DC (2010)

    Google Scholar 

  • Autor, D., Levy, F., Murnane, R.: The skill content of recent technological change: an empirical exploration. Q. J. Econ. 118, 1279–1333 (2003)

    Article  Google Scholar 

  • Ballarino, G., Braga, M., Bratti, M., Checchi, D., Filippin, A., Fiorio, C., Leonardi, M., Meschi, E., Scervini, F.: Italy: how labour market policies can foster earnings inequality. In: Nolan, W., Salverda, B., Checchi, D., Marx, I., McKnight, A., Tóth, I.G., van de Werfhorst, H. (eds.) Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries’ Experiences. Oxford University Press, Oxford (2014)

    Google Scholar 

  • Barsky, R., Bound, J., Charles, K., Lupton, J.: Accounting for the black-white wealth gap: a nonparametric approach. J. Am. Stat. Assoc. 97(459), 663–673 (2002)

    Article  Google Scholar 

  • Bettio, F., Verashchagina, A.: Fiscal System and Female Employment in Europe. Fondazione G. Brodolini, Italia (2009)

    Google Scholar 

  • Blackaby, D., Murphy, P.: Earnings, unemployment and Britain’s North-South divide: real or imaginary? Oxf. Bull. Econ. Stat. 57, 487–512 (1995)

    Article  Google Scholar 

  • Blinder, A.: Wage discrimination: reduced form and structural estimates. J. Hum. Resour. 8, 436–455 (1973)

    Article  Google Scholar 

  • Bonhomme, S., Hospido, L.: The cycle of earnings inequality: evidence from Spanish social security data. Econ. J. (2017). doi:10.1111/ecoj.12368

  • Breuss, F.: The crisis in retrospect: causes, effects and policy responses, routledge handbook of the economics of European integration, pp. 331–350. Routledge, London (2016)

  • Castellano, R., Musella, G., Punzo, G.: Structure of the labour market and wage inequality: evidence from European countries, Quality and Quantity. Springer, Berlin (2016)

    Google Scholar 

  • Castellano, R., Punzo, G.: The role of family background in the heterogeneity of self-employment in some transition countries. Transit. Stud. Rev. 20(1), 79–88 (2013)

    Article  Google Scholar 

  • Chevalier, A.: Measuring overeducation. Economica 70, 509–531 (2003)

    Article  Google Scholar 

  • Dickey, H.: The impact of migration on regional wage inequality: a semiparametric approach. J. Reg. Sci. 54, 893–915 (2014)

    Article  Google Scholar 

  • DiNardo, J., Fortin, N., Lemieux T.: Labor market institutions and the distribution of wages, 1973–1993: a semi-parametric approach. Econometrica 64, 1001–1045 (1996)

  • Eichengreen, B., O’Rourke K.H.: What do the new data tell us, VoxEU. org, 8, (2010)

  • Eurofound: Preparing for the upswing: training and qualification during the crisis. European Foundation for the Improvement of Living and Working Condition, Luxembourg (2011)

    Google Scholar 

  • Eurofound: Organisation of Working Time: Implications for Productivity and Working Conditions. Publications Office of the European Union, Luxembourg (2012)

    Google Scholar 

  • Eurofound: Employment Polarisation and Job Quality in the Crisis. European Jobs Monitor 2013. Eurofound, Dublin (2013)

    Google Scholar 

  • Eurofound: Drivers of Recent Job Polarisation and Upgrading in Europe: European Jobs Monitor 2014. Publications Office of the European Union, Luxembourg (2014)

    Google Scholar 

  • European Commission: Employment and Social Developments in Europe 2013. Publications office of the European Union, Luxembourg (2013)

    Google Scholar 

  • Eurostat: Educational intensity of employment and polarization in Europe and the US. Eurostat methodologies and working paper

  • Eurostat: Unemployment statistics—statistics explained, Luxembourg. http://ec.europa.eu/eurostat/statistics-explained/index.php/Unemployment_statistics Accessed on 15 April (2015)

  • Fernández-Macías, E.: Job polarization in Europe? changes in the employment structure and job quality, 1995–2007. Work Occup. 39(2), 157–182 (2012)

    Article  Google Scholar 

  • Ferrer-I-Carbonell, A., Ramos, X., Oviedo, M.: Spain: what can we learn from past decreasing inequality. In: Nolan, B., Salverda, W., Checchi, D., Marx, I., McKnight, A., Tóth, I.G., van de Werfhorst, H. (eds.) Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries’ Experiences. Oxford University Press, Oxford (2014)

    Google Scholar 

  • Financial Crisis Inquiry Commission: Final Report of the National Commission on the Causes of the Financial and Economic Crisis in the United States, Official Government Edition (2011)

  • Firpo, S., Fortin, N., Lemieux, T.: Decomposing Wage Distributions Using Recentered Influence Function Regressions. University of British Columbia, Vancouver (2007)

    Google Scholar 

  • Firpo, S., Fortin, N., Lemieux, T.: Unconditional quantile regressions. Econometrica 77(3), 953–973 (2009)

    Article  Google Scholar 

  • Fortin, N., Lemieux, T., Firpo, S.: Decomposition methods in economics. Handbook Labor Econ 4, 1–102 (2011)

  • Gardeazabal, J., Ugidos, A.: More on identification in detailed wage decompositions. Rev. Econ. Stat. 86(4), 1034–1036 (2004)

    Article  Google Scholar 

  • Goos, M., Manning, A.: Lousy and lovely jobs: the rising polarization of work in Britain. Rev. Econ. Stat. 89, 118–133 (2007)

    Article  Google Scholar 

  • Goos, M., Manning, A., Salomons, A.: Job polarization in Europe. Am. Econ. Rev. 99, 58–63 (2009)

    Article  Google Scholar 

  • Grusky, D.B., Western, B., Wimer, C.: The consequences of the great recession. In: Grusky, D.B., Western, B., Wimer, C. (eds.) The Great Recession. Russell Sage Foundation, New York (2011)

    Google Scholar 

  • Hampel, F.R.: The influence curve and its role in robust estimation. J. Am. Stat. Assoc. 69, 383–393 (1974)

    Article  Google Scholar 

  • Hawley, J., Otero, M.S., Duchemin, C.: Update of the European inventory on validation of non-formal and informal learning. Final Report, Cedefop (2010)

  • Hurley, J., Storrie, D., Jungblut, J.M.: Shifts in the Job Structure in Europe During the Great Recession. Publications Office of the European Union, Luxembourg (2015)

    Google Scholar 

  • Hurst, E., Li, G., Pugsley, B.: Are household surveys like tax forms? evidence from income underreporting of the self-employed. Rev. Econ. Stat. 96, 19–33 (2014)

    Article  Google Scholar 

  • ILO: Global Wage Report 2014/15: wages and income inequality. International Labour Office Publications (2015)

  • International Monetary Fund: World economic outlook: adjusting to lower commodity prices. Washington (October) (2015)

  • Jann, B.: Oaxaca: Stata module to compute the Blinder-Oaxaca decomposition. Statistical Software Components, Boston College Department of Economics, Boston (2008)

    Google Scholar 

  • Jenkins, S.P., Brandolini, A., Micklewright, J.: The Great Recession and the Distribution of Household Income. Oxford Scholarship Online, Oxford (2013)

    Google Scholar 

  • Juhn, C., Murphy, K.M., Pierce, B.: Accounting for the slowdown in black–white wage convergence. In: Kosters, M.H. (ed.) Workers and Their Wages: Changing Patterns in the United States, pp. 107–143. AEI Press, Washington, DC (1991)

    Google Scholar 

  • Juhn, C., Murphy, K., Pierce, B.: Wage inequality and the rise in returns to skill. J. Polit. Econ. 101, 410–442 (1993)

    Article  Google Scholar 

  • Kampelmann, S., Rycx, F.: The dynamics of task-biased technological change: the case of occupations. Bruss. Econ. Rev. 56(2), 113–142 (2013)

    Google Scholar 

  • Katsimi, M., Moutos, T., Pagoulatos, G., Sotiropoulos, D.: Greece: the (eventual) social hardship of soft budget constraints. In: Nolan, B., Salverda, W., Checchi, D., Marx, I., McKnight, A., Tóth, I.G., van de Werfhorst, H. (eds.) Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries’ Experiences. Oxford University Press, Oxford (2014)

    Google Scholar 

  • Keeley, B., Love, P.: From Crisis To Recovery: The Causes, Course and Consequences of the Great Recession. OECD Publishing, Paris (2010)

    Book  Google Scholar 

  • Krugman, P.: The Great Recession vs. The Great Depression. New York Times, New York (2009)

    Google Scholar 

  • Machado, J.A.F., Mata, J.: Counterfactual decomposition of changes in wage distributions using quantile regression. J. Appl. Econ. 20, 445–465 (2005)

    Article  Google Scholar 

  • Meschi, E., Scervini, F.: A new dataset on educational inequality, Gini Discussion Paper 3, Amsterdam Institute for Advanced Labour Studies (AIAS), University of Amsterdam (2010)

  • Motellón, E., López-Bazo, E., El-Attar, M.: Regional heterogeneity in wage distributions: evidence from Spain. J. Reg. Sci. 51, 558–584 (2011)

    Article  Google Scholar 

  • Nellas, V., Olivieri, E.: Polarization trends and labour market institutions. Working papers (2015)

  • Oaxaca, R.: Male–female wage differentials in urban labor markets. Int. Econ. Rev. 14(3), 693–709 (1973)

    Article  Google Scholar 

  • Oaxaca, R., Ransom, M.R.: Identification in detailed wage decompositions. Rev. Econ. Stat. 81(1), 154–157 (1999)

    Article  Google Scholar 

  • OECD: Competencies for the knowledge economy. OECD Publishing, Paris (2001)

    Google Scholar 

  • OECD: A Skilled Workforce for Strong Sustainable and Balance Growth. International Labour Office Geneva, Geneva (2010)

    Google Scholar 

  • Parker, S.C.: The Economics of Self-Employment and Entrepreneurship. Cambridge University Press, Cambridge (2004)

    Book  Google Scholar 

  • Pereira, J., Galego, A.: Inter-regional wage differentials in Portugal: an analysis across the wage distribution. Reg. Stud. 48, 1529–1546 (2014)

    Article  Google Scholar 

  • Rodrigues, C.F., Andrade, I.: Portugal: there and back again, an inequality’s tale. In: Nolan, B., Salverda, W., Checchi, D., Marx, I., McKnight, A., Tóth, I.G., van de Werfhorst, H. (eds.) Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries’ Experiences. Oxford University Press, Oxford (2014)

    Google Scholar 

  • Sicherman, N.: Overeducation in the labor market. J. Labor Econ. 9, 101–122 (1991)

    Article  Google Scholar 

  • Spitz-Oener, A.: Technical change, job tasks and rising educational demands: looking outside the wage structure. J. Labor Econ. 24, 235–270 (2006)

    Article  Google Scholar 

  • Tóth, I.G.: Revisiting grand narratives of growing inequalities: lesson from 30 country studies. In: Nolan, W., Salverda, B., Checchi, D., Marx, I., McKnight, A., Tóth, G., van de Werfhorst, H. (eds.) Changing Inequalities and Societal Impacts in Rich Countries: Thirty Countries’ Experiences. Oxford University Press, Oxford (2014)

    Google Scholar 

  • Verloo, M.: Multiple inequalities, intersectionality and the European Union, European. J. Women’s Stud. 13(3), 211–228 (2006)

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. Department of Economic and Legal Studies, University of Naples “Parthenope”, Via Generale Parisi 13, 80132, Naples, Italy

    Antonio Garofalo, Gennaro Punzo & Gaetano Musella

  2. Department of Management and Quantitative Studies, University of Naples “Parthenope”, Via Generale Parisi 13, 80132, Naples, Italy

    Rosalia Castellano

Authors
  1. Antonio Garofalo
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Rosalia Castellano
    View author publications

    You can also search for this author in PubMed Google Scholar

  3. Gennaro Punzo
    View author publications

    You can also search for this author in PubMed Google Scholar

  4. Gaetano Musella
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Antonio Garofalo.

Appendix

Appendix

See Tables 14 and 15.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Garofalo, A., Castellano, R., Punzo, G. et al. Skills and labour incomes: how unequal is Italy as part of the Southern European countries?. Qual Quant 52, 1471–1500 (2018). https://doi.org/10.1007/s11135-017-0531-6

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11135-017-0531-6

Keywords

JEL Classification

Search

Navigation