Urban wage premia, cost of living, and collective bargaining

Abstract

Abstract In this article, we estimate urban wage premia (UWPs) in Italy, with its economy characterized by the interplay between collective wage bargaining and spatial heterogeneity in the cost of living. Our dataset for the 2005–2015 period exploits detailed information on the universe of workers in the private sector and price measures disaggregated at a fine spatial level. For employees under collective bargaining, we find a zero UWP in nominal terms and a negative UWP in real terms. When we turn to consider various groups of self-employed workers, who are not covered by national labor agreements, we instead find a positive nominal UWP and no real wage penalties.