Fixed Exchange-Rate Policy and Real Wage Growth: Quasi-Experimental Evidence
42 Pages Posted: 30 Dec 2014
Using Difference-in-Differences estimation and data from the European Community Household Panel, this paper suggests that the fixed exchange-rate policy adopted by Italy in the 1997-2000 period has reduced the real hourly wage growth of Italian full-time workers with permanent contracts, on average, by 3%. Yet, the cost of the policy has been ultimately paid by the private sector where real wage growth has decreased by 5.4%.
Keywords: difference-in-differences, productivity, wages
JEL Classification: J31, C23
Suggested Citation: Suggested Citation