The Wage Differentials between Skilled and Unskilled Workers: An Analysis for Italy

The authors study the evolution of the wage differentials between skilled and unskilled workers in Italy from 1977 to 2004. In this period, the differentials do not show a clear trend (apart for a feeble increasing trend in the very last years) and they fluctuate around a fairly stable mean. Four factors may influence the evolution of those differentials: relative supply of skilled and unskilled workers, technological change (which may be biased toward a certain category), international commerce, and, finally, institutions in the labour market. After discussing some of these aspects from a theoretical point of view, the authors perform an econometrical analysis for the Italian case with the SUR estimation technique, and test which of these factors are important in explaining the evolution of the differentials and how they affect different categories of workers.