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Wages and prices in Italy during the crisis: the firms� perspective

Author

Listed:
  • Francesco D�Amuri

    (Bank of Italy)

  • Silvia Fabiani

    (Bank of Italy)

  • Roberto Sabbatini

    (Bank of Italy)

  • Raffaele Tartaglia Polcini

    (Bank of Italy)

  • Fabrizio Venditti

    (Bank of Italy)

  • Eliana Viviano

    (Bank of Italy)

  • Roberta Zizza

    (Bank of Italy)

Abstract
Following the two surveys carried out in 2007 and 2009 on firms� price and wage setting practices, in June 2013 the ESCB�s Wage Dynamics Network (WDN) conducted a third survey aimed at assessing, through a harmonised questionnaire, the most important transformations under way in the national labour markets. This paper documents the results of the survey carried out in Italy. The sovereign debt crisis severely hit the Italian economy, causing a collapse in demand, increased uncertainty and difficulties in accessing external finance. Firms responded by decreasing labour input (adjusting both the intensive and the extensive margins) more often than wages. However, wage-setting practices were also affected by the new economic landscape: the percentage of workers employed in firms enacting wage freezes or cuts has steadily increased since 2010, reaching 17% of the total workforce in the sectors considered in 2013. Furthermore, a large share of companies have adapted their pricing strategy to the new economic environment; the frequency of price adjustments has increased, mainly as a reaction to stronger competition.

Suggested Citation

  • Francesco D�Amuri & Silvia Fabiani & Roberto Sabbatini & Raffaele Tartaglia Polcini & Fabrizio Venditti & Eliana Viviano & Roberta Zizza, 2015. "Wages and prices in Italy during the crisis: the firms� perspective," Questioni di Economia e Finanza (Occasional Papers) 289, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_289_15
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2015-0289/QEF_289_15.pdf
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    References listed on IDEAS

    as
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    5. Silvia Fabiani & Roberto Sabbatini, 2011. "Wage adjustment by Italian firms: any difference during the crisis? A survey-based analysis," Questioni di Economia e Finanza (Occasional Papers) 94, Bank of Italy, Economic Research and International Relations Area.
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    Cited by:

    1. Effrosyni Adamopoulou & Emmanuele Bobbio & Marta De Philippis & Federico Giorgi, 2016. "Wage rigidities and business cycle fluctuations: a linked employer-employee analysis," IZA Journal of Labor Policy, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), vol. 5(1), pages 1-32, December.
    2. Ioana A. Duca & José M. Montero & Marianna Riggi & Roberta Zizza, 2017. "I will survive. Pricing strategies of financially distressed firms," Temi di discussione (Economic working papers) 1106, Bank of Italy, Economic Research and International Relations Area.
    3. Simone Lenzu & Francesco Manaresi, 2019. "Sources and implications of resource misallocation: new evidence from firm-level marginal products and user costs," Questioni di Economia e Finanza (Occasional Papers) 485, Bank of Italy, Economic Research and International Relations Area.
    4. Theodora Kosma & Evangelia Papapetrou & Georgia Pavlou & Christina Tsochatzi & Pinelopi Zioutou, 2017. "Labour market adjustments and reforms in Greece during the crisis: microeconomic evidence from the third wave of the wage dynamics," Working Papers 227, Bank of Greece.
    5. Lenzu, Simone & Manaresi, Francesco, 2018. "Do Marginal Products Differ from User Costs? Micro-Level Evidence from Italian Firms," Working Papers 276, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    6. Fabrizio Pompei & Mirella Damiani & Andrea Ricci, 2019. "Family firms, performance-related pay, and the great crisis: evidence from the Italian case," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 28(5), pages 1193-1225.

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    More about this item

    Keywords

    labour cost adjustment; pricing strategies;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand
    • J30 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - General
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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