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What Can Monopsony Explain of the Gender Wage Differential in Italy?

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  • G. Sulis
Abstract
This paper studies gender wage differentials in Italy using first-order predictions of monopsony-search models. It compares empirical predictions of these models against other competing ones of wage determination in non-competitive settings. The paper looks at the empirical relevance of the model in terms of third degree wage discrimination among men and women by estimating the labour supply elasticity to the individual firm. It also tests the monopsony model using a "natural" experiment. Italian administrative longitudinal data from INPS are used. Women have lower elasticity of labour supply yo the individual firm - employer size regressions indicate larger effects (and consequently lower elasticity) for women as predicted by the monopsony model. Using the theoretical dynamic monopsony-search model of Burdett and Mortensen (1998), wage elasticity of separations and recruits confirm this result. Using relative men/women employment effects resulting from institutional changes in wage indexation mechanism (Scala mobile), it is found that relative male employment responded differently in the two periods to the exogenous relative increase in the wage differential, as predicted by the monopsony model. Search frictions explain about 50% of the gender differential.

Suggested Citation

  • G. Sulis, 2007. "What Can Monopsony Explain of the Gender Wage Differential in Italy?," Working Paper CRENoS 200713, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    • Handle: RePEc:cns:cnscwp:200713
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    Citations

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    Cited by:

    1. Eirini-Christina Saloniki, 2015. "A monopsonistic approach to disability discrimination and non-discrimination," Economics Bulletin, AccessEcon, vol. 35(4), pages 2064-2073.
    2. M. Pitzalis & I. Sulis & M. Porcu, 2008. "Differences of Cultural Capital among Students in Transition to University. Some First Survey Evidences," Working Paper CRENoS 200805, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    3. Vincenzo Scoppa, 2014. "Firm Size and Wages in Italy: Evidence from Exogenous Job Displacements," Manchester School, University of Manchester, vol. 82(6), pages 677-700, December.
    4. Rafael Sánchez & Javier Finot & Mauricio G. Villena, 2022. "Gender wage gap and firm market power: evidence from Chile," Applied Economics, Taylor & Francis Journals, vol. 54(18), pages 2109-2121, April.
    5. Bachmann, Ronald & Frings, Hanna, 2014. "Monopsony competition and the minimum wage: Evidence from Germany," VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy 100367, Verein für Socialpolitik / German Economic Association.
    6. Anna Sokolova & Todd Sorensen, 2021. "Monopsony in Labor Markets: A Meta-Analysis," ILR Review, Cornell University, ILR School, vol. 74(1), pages 27-55, January.
    7. Fanfani, Bernardo, 2022. "Tastes for discrimination in monopsonistic labour markets," Labour Economics, Elsevier, vol. 75(C).
    8. I. Sulis & M. Porcu, 2008. "Assessing the Effectiveness of a Stochastic Regression Imputation Method for Ordered Categorical Data," Working Paper CRENoS 200804, Centre for North South Economic Research, University of Cagliari and Sassari, Sardinia.
    9. Céline Detilleux & Nick Deschacht, 2021. "The causal effect of the number of children on gender‐specific labour supply elasticities to the firm," Industrial Relations Journal, Wiley Blackwell, vol. 52(1), pages 2-24, January.
    10. Filippo Passerini, 2022. "Monopsony in labor markets: Empirical evidence from Italian firms," French Stata Users' Group Meetings 2022 24, Stata Users Group.
    11. Kovalenko, Tim & Sauerbier, Timo & Schröpf, Benedikt, 2023. "The fall and rebound of average establishment size in West Germany," Discussion Papers 126, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    12. Ronald Bachmann & Hanna Frings, 2017. "Monopsonistic competition, low-wage labour markets, and minimum wages – An empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 49(51), pages 5268-5286, November.
    13. Boris Hirsch, 2016. "Gender wage discrimination," IZA World of Labor, Institute of Labor Economics (IZA), pages 310-310, November.
    14. Bredemeier, Christian, 2019. "Gender Gaps in Pay and Inter-Firm Mobility," IZA Discussion Papers 12785, Institute of Labor Economics (IZA).

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    More about this item

    Keywords

    monopsony; gender wage differentials; elasticity of labour supply; employer size-effect; italy;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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