The contribution explores the relationship between performance-related pay (PRP) and productivity in the Italian economy. It contributes to the literature in two main ways. First, it provides estimates for the PRP – productivity relationship based on a nationally representative sample of manufacturing and services companies (other studies on Italy are more limited in scope, since they focus on specific sectors). Second, it addresses the question of firms’ heterogeneity, an aspect so far not examined in relation to PRP in Italy. We use a two-step approach. In the first step, we estimate a classical production function using longitudinal data on the balance sheet variables of Italian firms over the period 2002–2005. In the second step, we regress the distribution of the firm-specific fixed effects on dummy variables for the presence of PRP and unions, as well as on control variables for the year 2005. The most important results are that the adoption of PRP is positively and uniformly correlated with productivity throughout the whole distribution and that the presence of trade unions has a positive association with firms’ unobserved productivity across all quantiles, being significantly higher for the best performing firms (those placed at the highest quantile of the productivity distribution).

Performance-Related Pay, Unions and Productivity in Italy: evidence from quantile regressions

DAMIANI, Mirella;
2011

Abstract

The contribution explores the relationship between performance-related pay (PRP) and productivity in the Italian economy. It contributes to the literature in two main ways. First, it provides estimates for the PRP – productivity relationship based on a nationally representative sample of manufacturing and services companies (other studies on Italy are more limited in scope, since they focus on specific sectors). Second, it addresses the question of firms’ heterogeneity, an aspect so far not examined in relation to PRP in Italy. We use a two-step approach. In the first step, we estimate a classical production function using longitudinal data on the balance sheet variables of Italian firms over the period 2002–2005. In the second step, we regress the distribution of the firm-specific fixed effects on dummy variables for the presence of PRP and unions, as well as on control variables for the year 2005. The most important results are that the adoption of PRP is positively and uniformly correlated with productivity throughout the whole distribution and that the presence of trade unions has a positive association with firms’ unobserved productivity across all quantiles, being significantly higher for the best performing firms (those placed at the highest quantile of the productivity distribution).
2011
9780857247599
File in questo prodotto:
Non ci sono file associati a questo prodotto.

I documenti in IRIS sono protetti da copyright e tutti i diritti sono riservati, salvo diversa indicazione.

Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11391/856098
Citazioni
  • ???jsp.display-item.citation.pmc??? ND
  • Scopus 2
  • ???jsp.display-item.citation.isi??? 1
social impact