LIUC
The European Journal of Comparative Economics
ISSN: 1824-2979
LIUC
EJCE
Year: 2011, December. Volume: 8 - Issue: 2

Is There Rent Sharing in Italy? Evidence from Employer-Employee Data

Alessia Matano ; Paolo Naticchioni

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Start page: 265 - End page: 279

Keywords:
Rent Sharing, Sorting, Wage, Italy
Abstract:
Using a unique employer-employee panel database, we investigate the extent of rent sharing in Italy from 1996 to 2003. We derive the following findings. First, after controlling for the national bargaining level, there is robust evidence of rent sharing at firm level. Second, by means of fixed effects estimates we show that the sorting of high-ability workers into high-profit firms appears to play a substantial role, since it captures a significant amount of cross sectional estimates of rent sharing. Third, in accordance to the related literature the endogeneity of profits causes a severe underestimation of rent sharing. Our final IV estimate of the elasticity of wages with respect to profits per employee amounts to 6%, with a "Lester" range of 24%. Moreover, we point out that the impact of rent sharing is not homogeneous across several dimensions (gender, occupation, sector and macroarea).

Jel code: C33
Jel code: J31
Jel code: J41
Jel code: L25
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