Template-Type: ReDIF-Paper 1.0

Author-Name: Andrea Garnero
Author-X-Name-First: Andrea
Author-X-Name-Last: Garnero


Author-Name: Claudio Lucifora
Author-X-Name-First: Clausio
Author-X-Name-Last: Lucifora
Author-Email: claudio.lucifora@unicatt.it
Author-Workplace-Name: Università Cattolica del Sacro Cuore
Author-Workplace-Name: Dipartimento di Economia e Finanza, Università Cattolica del Sacro Cuore

Title: TURNING A BLIND EYE? COMPLIANCE TO MINIMUM WAGES AND EMPLOYMENT.


Abstract: In this paper, we explore the relationship between non-compliance with bargained minimum wages and employment. We illustrate the role of labour courts with respect to the Constitutional provision of “fair” wage and sketch a model in which firms choose their desired levels of employment and non-compliance. We show that when employers internalize the expected costs of non-compliance, the effect of deviating from the bargained minimum wages on employment levels are modest, or null. Using data from the Italian LFS, we find evidence of a positive, but small, trade-off between non-compliance and employment. We discuss the policy implications of these findings for wage bargaining, also considering the costs that “turning a blind eye” to non-compliance implies for the Italian system of industrial relations. 
Length: 34
Creation-Date: 2020-01
File-URL: http://dipartimenti.unicatt.it/economia-finanza-def085.pdf
File-Format: Application/pdf
File-Function: First version, 2020
Number: def085
Classification-JEL: J08, J31, J52, J83. 
Keywords: collective bargaining, sectoral minimum wages, compliance.
Handle: RePEc:ctc:serie1:def085