Rigid wages? Inflation and wage growth in Italy, 1974–2024< /strong>
Abstract
In this paper we use the rich information contained in the administrative archives of the Italian National Social Security Inst itute (INPS) to study the relationship between inflation and wage growth in Italy over the last 50 years. Our analysis uncovers a number of important facts about the Italian labor market. We find that during our sample period , the distribution of nominal wage growth changed substantially, and as inf lation went down, so did the center and spread of this distribution. With t he decrease of inflation, the frequency of nominal wage cuts also increased , revealing a high degree of wage flexibility achieved mainly through chang es in non-standard forms of compensation, such as bonuses and overtime. Our analysis is able to uncover what type of worker manages to better defend t hemselves from inflation. In particular, we find that stayers have a smalle r probability of nominal and real wage cuts than movers, even if workers vo luntarily quit their job. The empirical evidence we provide is consistent w ith the view that inflation is a way to “grease the wheels of the labor mar ket”.
DTSTAMP:20260415T202926Z DTSTART:20260304T130000Z DTEND:20260304T140000Z SEQUENCE:0 TRANSP:OPAQUE END:VEVENT END:VCALENDAR