## _wp0843

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---

### I. INTRODUCTION
- Central claim: Centralized/coordinated wage bargaining systems may cause low wage differentiation and high unemployment differentials across skill levels, population groups, industries and regions.
- Empirical gap: Evidence on effects on regional wage differentiation is scant due to data limitations at the regional level.
- EU context:
  - Many EU countries have average unemployment higher than the rest of the industrial world.
  - Many EU countries have high regional unemployment differentials and relatively low regional wage differentials.
  - Italy example:
    - Unemployment in the South is almost four times higher than in the North.
    - Productivity in the South is estimated to be only 80 percent of that in the North.
    - Wages in the South are about 90 percent of those in the North.
    - Taking cost of living into account, real wages in the South may actually be higher than in the North.
- Paper’s empirical result preview:
  - Analysis for regions in 10 EU countries for the period 1980-2000 suggests countries with less coordinated wage bargaining systems have higher regional wage differentials after controlling for regional productivity and unemployment differentials.
  - Results are robust to instrumental variables estimation, suggesting causality from wage bargaining system to regional wage differentiation.
  - Result holds only for countries with high regional productivity differentials.
- Paper structure: section II literature; section III empirical evidence; section IV conclusions.

### II. WAGE BARGAINING SYSTEM AND REGIONAL WAGE DIFFERENTIATION: LITERATURE SYNTHESIS
- Theoretical and empirical findings on unemployment and inflation:
  - Bruno and Sachs (1985): centralized wage bargaining results in lower unemployment.
  - Calmfors and Driffil (1988), Flanagan, Moene and Wallerstein (1993), Cukierman and Lippi (1999): either centralized or very decentralized (firm level) bargaining systems result in lower unemployment and lower wages; intermediate (industry level) bargaining tends to result in higher unemployment and higher wages.
  - OECD (1997 and 2006), Flanagan (1999), Aidt and Tzannatos (2002): literature not fully robust; debate remains open.
- Centralization/coordination reduces wage dispersion:
  - Coordinated national bargaining may favor the median voter and compress wage differentials.
  - Pench, Sestito, and Frontini (1999): in centralized labor markets with large interregional productivity differentials, decisions tailored to the median region can create a wage floor consistent with high unemployment in less productive regions.
  - Solidaristic wage policy: unions may set wages based on average productivity.
- Leading-region determination and migration incentives:
  - Saint-Paul (1997): wages determined in leading regions (North in Italy, West in Germany); leading-region unions have incentives to keep wage differentiation low to slow migration flows.
  - Brunello, Lupi, and Ordine (2001) and Vamvakidis (2002): in Italy, Southern wages are significantly affected by Northern unemployment, while Southern unemployment does not significantly affect Northern unemployment.
- Distributive power and regional interests:
  - Parties with decision power in centralized systems may prefer low regional wage differentiation (leading-region workers/employers benefit).
  - Groups benefiting from higher regional wage differentiation include unemployed in lagging regions and employers in lagging regions (who may be less powerful).
- Asymmetric shock propagation:
  - Centralized/coordinated systems where wages determined by leading region can lead to low wage dispersion coexisting with high unemployment variation.
  - Negative shocks increase unemployment in lagging regions without affecting wages; same shock in leading region reduces wages and employment impact is smaller/shorter.
  - If local wages reflected local conditions, asymmetric shocks would not cause persistent unemployment disparities.
  - Empirical support: Pench, Sestito, and Frontini (1999); Thomas (2002) finds similar at industry level.
- Robust empirical regularity from literature:
  - OECD (1997, 2004, 2006) finds strong link between higher centralization/coordination and lower earnings inequality across skills, industries, and population groups (young, older workers, women).
  - This result is the most robust in the literature (see Flanagan (1999), Aidt and Tzannatos (2002)).
  - Little prior empirical work on regional wage disparities specifically.

### III. EMPIRICAL ANALYSIS: WAGE BARGAINING CENTRALIZATION AND REGIONAL WAGE DIFFERENTIATION IN THE EU
- Data and measurement:
  - Countries included: Belgium, Germany, Spain, France, Italy, Netherlands, Austria, Portugal, Sweden and the UK.
  - Sample: 220 regions; regional definition follows Eurostat.
  - Period: 1980 to 2000; regressions estimated as pooled panel of five-year averages.
  - Dependent variable: absolute value of 1 minus the ratio of regional wage to national wage (i.e., absolute regional wage differential).
  - Main independent variables:
    - Lagged regional labor productivity differential (absolute value of 1 minus ratio regional productivity to national productivity).
    - Lagged regional unemployment differential (absolute value of 1 minus ratio regional unemployment to national unemployment).
    - OECD index of coordination of the wage bargaining system (values 1 to 5; same for all regions within a country).
  - Coordination chosen as indicator of centralization; literature argues coordination can reproduce centralized outcomes even with decentralized bargaining.
- Key descriptive context:
  - Many euro area countries centralized and highly coordinated collective bargaining systems; particularly Italy, Austria, Germany, and Norway.
  - Overall OECD trend toward more decentralized wage bargaining systems (OECD, 2004 and 2006).
- Regression specifications and results summary:
  - Hausman test favors fixed effects over random effects.
  - Index of coordination estimate:
    - Pooled panel regression: estimate negative and statistically significant at the 10 percent level.
    - Fixed and random region effects: estimate negative and statistically significant at the 1 percent level.
    - Fixed region and time effects: estimate negative but significant only at the 15 percent level.
  - Lagged unemployment differential: positive estimate but not always statistically significant.
  - Lagged productivity differential: positive and statistically significant in many specifications, but in the fixed region effects regression has the “wrong sign” though significant.
  - Fixed effects model explains 66 percent of variation in regional wages.
- Instrumental variables estimation (Table 5) — exact IV coefficient estimates:
  - Instruments: lagged values of coordination and centralization indices.
  - Index of coordination becomes more statistically significant: statistically significant at the 1 percent level even with fixed region and time effects.
  - Coefficient values:
    - Lagged unemployment differential: 0.130*** (fixed region effects) and 0.108*** (fixed region and time effects).
    - Lagged productivity differential: -0.380*** (fixed region effects) and -0.332*** (fixed region and time effects).
    - Index of coordination in wage bargaining: -0.044*** (fixed region effects) and -0.032*** (fixed region and time effects).
    - Adj. R-squared: 0.62 and 0.65; Observations: 220.
- Interaction term regressions (Table 6) — exact findings:
  - Interaction with unemployment differentials:
    - Index of coordination remains negative and statistically significant at least at the 10 percent level when interacting with unemployment differentials.
    - Interaction term index*lagged unemployment differential: positive coefficients (0.028 and 0.033) but statistically insignificant (t-statistics 1.057 and 1.312).
  - Interaction with productivity differentials:
    - Index of coordination loses significance when interacting with productivity differentials.
    - Interaction term index*productivity differential: -0.218** and -0.177* (fixed region effects and fixed region and time effects).
    - Interpretation: In countries with large regional productivity differentials, coordinated wage bargaining reduces the extent to which regional wages reflect productivity differentials; where productivity differentials are small, coordination matters less.
- Italy counterfactual (exact numbers):
  - Italy’s current coordination index: 4.
  - If Italy’s coordination index declined from 4 to 1 (minimum), regional wage differences would increase by between 52 percent to 60 percent, depending on specification, ceteris paribus.
- Robustness and causality:
  - Fixed effects and instrumental variables estimates support causality from coordination to regional wage differentiation rather than reverse causality.

### IV. CONCLUSIONS
- Main empirical conclusion:
  - For EU regions in 1980-2000, highly coordinated wage bargaining systems are associated with low regional wage differentiation.
  - Countries with less coordinated wage bargaining systems have higher regional wage differentials, controlling for regional productivity and unemployment differentials.
  - Results robust to fixed effects and instrumental variables estimation, suggesting wage bargaining system influences regional wage differentiation.
  - A more decentralized wage bargaining system could increase regional wage differentiation, particularly in countries with high regional productivity differentials.
  - Using Italy as example, economic significance is large: coordination index decline from 4 to 1 implies regional wage differences increase by 52 percent to 60 percent.
- Caveats and suggestions for future research:
  - Results are suggestive due to:
    - Small country sample and relatively small variation in wage bargaining characteristics across sample countries.
    - Relatively low statistical significance in some specifications (though IV estimates mitigate this).
    - Wage bargaining indices may suffer measurement errors.
  - Future work should:
    - Increase the country sample as more data become available (potentially adding Denmark, Norway, Finland).
    - Improve indices of wage bargaining.
    - Investigate other determinants of regional wage differentials beyond those controlled for in this paper.

### Key reported numeric findings and model statistics (selected exact values)
- Sample and scope:
  - Countries: Belgium, Germany, Spain, France, Italy, Netherlands, Austria, Portugal, Sweden and the UK.
  - Regions: 220.
  - Period: 1980 to 2000 (five-year averages).
- Table 1 (selected country unemployment and participation snapshots):
  - Euro area: Unemployment 4.9 (1980), 7.2 (1990), 7.9 (2000), 6.8 (2007); Participation 65.1 (1980), 65.7 (1990), 69.1 (2000), 71.9 (2007).
  - Italy: Unemployment 5.6 (1980), 9.1 (1990), 10.2 (2000), 5.9 (2007); Participation 61.3 (1980), 60.0 (1990), 60.0 (2000), 63.1 (2007).
  - United States: Unemployment 7.2 (1980), 5.6 (1990), 4.0 (2000), 4.6 (2007); Participation 63.8 (1980), 66.5 (1990), 67.1 (2000), 66.1 (2007).
- Table 2 (regional coefficient of variation, unemployment):
  - EU: 65.5 (1990), 60.1 (1995), 65.9 (2000).
  - Italy: 70.8 (1990), 63.9 (1995), 75.3 (2000).
  - United Kingdom: 47.1 (1990), 35.8 (1995), 53.0 (2000).
  - United States: 25.5 (1993), 27.0 (1995), 27.5 (2000).
- Table 4 (selected coefficient signs and significance):
  - Lagged productivity differential: 0.472*** (pooled), -0.394*** (fixed region), 0.306*** (random), -0.326*** (fixed region and time).
  - Index of coordination: -0.012* (pooled), -0.026*** (fixed region), -0.016*** (random), -0.014 (fixed region and time).
  - Adj. R-squared: 0.25 (pooled), 0.63 (fixed region), 0.11 (random), 0.66 (fixed region and time).
- Table 5 (IV estimates, exact coefficients):
  - Lagged unemployment differential: 0.130*** (fixed region), 0.108*** (fixed region and time).
  - Lagged productivity differential: -0.380*** (fixed region), -0.332*** (fixed region and time).
  - Index of coordination in wage bargaining: -0.044*** (fixed region), -0.032*** (fixed region and time).
  - Adj. R-squared: 0.62 and 0.65; Observations: 220.
- Table 6 (interaction terms, selected coefficients):
  - Index of coordination in wage bargaining * Productivity differential: -0.218** (fixed region), -0.177* (fixed region and time).
  - Adj. R-squared range across specifications: 0.63, 0.66, 0.64, 0.67.
  - Observations: 220.

*Source: IMF working paper content (regional analysis of wage bargaining coordination and regional wage differentials, 1980–2000).*

### References..............................................................................................................

### _wp0843 - References..............................................................................................................

### I. INTRODUCTION
- Central claim: Centralized/coordinated wage bargaining systems may cause low wage differentiation and high unemployment differentials across skill levels, population groups, industries and regions.
- Empirical gap: Evidence on effects on regional wage differentiation is scant due to data limitations at the regional level.
- EU context:
  - Many EU countries have average unemployment higher than the rest of the industrial world.
  - Many EU countries have high regional unemployment differentials and relatively low regional wage differentials.
  - Italy example:
    - Unemployment in the South is almost four times higher than in the North.
    - Productivity in the South is estimated to be only 80 percent of that in the North.
    - Wages in the South are about 90 percent of those in the North.
    - Taking cost of living into account, real wages in the South may actually be higher than in the North.
- Paper’s empirical result preview:
  - Analysis for regions in 10 EU countries for the period 1980-2000 suggests countries with less coordinated wage bargaining systems have higher regional wage differentials after controlling for regional productivity and unemployment differentials.
  - Results are robust to instrumental variables estimation, suggesting causality from wage bargaining system to regional wage differentiation.
  - Result holds only for countries with high regional productivity differentials.
- Paper structure: section II literature; section III empirical evidence; section IV conclusions.

### II. WAGE BARGAINING SYSTEM AND REGIONAL WAGE DIFFERENTIATION: LITERATURE SYNTHESIS
- Theoretical and empirical findings on unemployment and inflation:
  - Bruno and Sachs (1985): centralized wage bargaining results in lower unemployment.
  - Calmfors and Driffil (1988), Flanagan, Moene and Wallerstein (1993), Cukierman and Lippi (1999): either centralized or very decentralized (firm level) bargaining systems result in lower unemployment and lower wages; intermediate (industry level) bargaining tends to result in higher unemployment and higher wages.
  - OECD (1997 and 2006), Flanagan (1999), Aidt and Tzannatos (2002): literature not fully robust; debate remains open.
- Centralization/coordination reduces wage dispersion:
  - Coordinated national bargaining may favor the median voter and compress wage differentials.
  - Pench, Sestito, and Frontini (1999): in centralized labor markets with large interregional productivity differentials, decisions tailored to the median region can create a wage floor consistent with high unemployment in less productive regions.
  - Solidaristic wage policy: unions may set wages based on average productivity.
- Leading-region determination and migration incentives:
  - Saint-Paul (1997): wages determined in leading regions (North in Italy, West in Germany); leading-region unions have incentives to keep wage differentiation low to slow migration flows.
  - Brunello, Lupi, and Ordine (2001) and Vamvakidis (2002): in Italy, Southern wages are significantly affected by Northern unemployment, while Southern unemployment does not significantly affect Northern unemployment.
- Distributive power and regional interests:
  - Parties with decision power in centralized systems may prefer low regional wage differentiation (leading-region workers/employers benefit).
  - Groups benefiting from higher regional wage differentiation include unemployed in lagging regions and employers in lagging regions (who may be less powerful).
- Asymmetric shock propagation:
  - Centralized/coordinated systems where wages determined by leading region can lead to low wage dispersion coexisting with high unemployment variation.
  - Negative shocks increase unemployment in lagging regions without affecting wages; same shock in leading region reduces wages and employment impact is smaller/shorter.
  - If local wages reflected local conditions, asymmetric shocks would not cause persistent unemployment disparities.
  - Empirical support: Pench, Sestito, and Frontini (1999); Thomas (2002) finds similar at industry level.
- Robust empirical regularity from literature:
  - OECD (1997, 2004, 2006) finds strong link between higher centralization/coordination and lower earnings inequality across skills, industries, and population groups (young, older workers, women).
  - This result is the most robust in the literature (see Flanagan (1999), Aidt and Tzannatos (2002)).
  - Little prior empirical work on regional wage disparities specifically.

### III. EMPIRICAL ANALYSIS: WAGE BARGAINING CENTRALIZATION AND REGIONAL WAGE DIFFERENTIATION IN THE EU
- Data and measurement:
  - Countries included: Belgium, Germany, Spain, France, Italy, Netherlands, Austria, Portugal, Sweden and the UK.
  - Sample: 220 regions; regional definition follows Eurostat.
  - Period: 1980 to 2000; regressions estimated as pooled panel of five-year averages.
  - Dependent variable: absolute value of 1 minus the ratio of regional wage to national wage (i.e., absolute regional wage differential).
  - Main independent variables:
    - Lagged regional labor productivity differential (absolute value of 1 minus ratio regional productivity to national productivity).
    - Lagged regional unemployment differential (absolute value of 1 minus ratio regional unemployment to national unemployment).
    - OECD index of coordination of the wage bargaining system (values 1 to 5; same for all regions within a country).
  - Coordination chosen as indicator of centralization; literature argues coordination can reproduce centralized outcomes even with decentralized bargaining.
- Key descriptive context:
  - Many euro area countries centralized and highly coordinated collective bargaining systems; particularly Italy, Austria, Germany, and Norway.
  - Overall OECD trend toward more decentralized wage bargaining systems (OECD, 2004 and 2006).
- Regression specifications and results summary:
  - Table 4 (pooled and panel specifications):
    - Hausman test favors fixed effects over random effects.
    - Index of coordination estimate:
      - Pooled panel regression: estimate negative and statistically significant at the 10 percent level.
      - Fixed and random region effects: estimate negative and statistically significant at the 1 percent level.
      - Fixed region and time effects: estimate negative but significant only at the 15 percent level.
    - Lagged unemployment differential: positive estimate but not always statistically significant.
    - Lagged productivity differential: positive and statistically significant in many specifications, but in the fixed region effects regression has the “wrong sign” though significant.
    - Fixed effects model explains 66 percent of variation in regional wages.
  - Instrumental variables estimation (Table 5):
    - Instruments: lagged values of coordination and centralization indices.
    - Index of coordination becomes more statistically significant: statistically significant at the 1 percent level even with fixed region and time effects.
    - Coefficient values (from Table 5):
      - Lagged unemployment differential: 0.130*** (fixed region effects) and 0.108*** (fixed region and time effects).
      - Lagged productivity differential: -0.380*** (fixed region effects) and -0.332*** (fixed region and time effects).
      - Index of coordination in wage bargaining: -0.044*** (fixed region effects) and -0.032*** (fixed region and time effects).
      - Adj. R-squared: 0.62 and 0.65; Observations: 220.
  - Interaction term regressions (Table 6):
    - Interaction with unemployment differentials:
      - Index of coordination remains negative and statistically significant at least at the 10 percent level when interacting with unemployment differentials.
      - Interaction term index*lagged unemployment differential: positive coefficients (0.028 and 0.033) but statistically insignificant (t-statistics 1.057 and 1.312).
    - Interaction with productivity differentials:
      - Index of coordination loses significance when interacting with productivity differentials.
      - Interaction term index*productivity differential: -0.218** and -0.177* (fixed region effects and fixed region and time effects), indicating the impact of coordination depends on productivity differentials.
    - Interpretation: In countries with large regional productivity differentials, coordinated wage bargaining reduces the extent to which regional wages reflect productivity differentials; where productivity differentials are small, coordination matters less.
- Italy counterfactual:
  - Italy’s current coordination index: 4.
  - If Italy’s coordination index declined from 4 to 1 (minimum), regional wage differences would increase by between 52 percent to 60 percent, depending on specification, ceteris paribus.
- Robustness and causality:
  - Fixed effects and instrumental variables estimates support causality from coordination to regional wage differentiation rather than reverse causality.

### IV. CONCLUSIONS
- Main empirical conclusion:
  - For EU regions in 1980-2000, highly coordinated wage bargaining systems are associated with low regional wage differentiation.
  - Countries with less coordinated wage bargaining systems have higher regional wage differentials, controlling for regional productivity and unemployment differentials.
  - Results robust to fixed effects and instrumental variables estimation, suggesting wage bargaining system influences regional wage differentiation.
  - A more decentralized wage bargaining system could increase regional wage differentiation, particularly in countries with high regional productivity differentials.
  - Using Italy as example, economic significance is large: coordination index decline from 4 to 1 implies regional wage differences increase by 52 percent to 60 percent.
- Caveats and suggestions for future research:
  - Results are suggestive due to:
    - Small country sample and relatively small variation in wage bargaining characteristics across sample countries.
    - Relatively low statistical significance in some specifications (though IV estimates mitigate this).
    - Wage bargaining indices may suffer measurement errors.
  - Future work should:
    - Increase the country sample as more data become available (potentially adding Denmark, Norway, Finland).
    - Improve indices of wage bargaining.
    - Investigate other determinants of regional wage differentials beyond those controlled for in this paper.

### Key reported numeric findings and model statistics (selected exact values from tables)
- Sample and scope:
  - Countries: Belgium, Germany, Spain, France, Italy, Netherlands, Austria, Portugal, Sweden and the UK.
  - Regions: 220.
  - Period: 1980 to 2000 (five-year averages).
- Table 1 (selected country unemployment and participation snapshots):
  - Euro area: Unemployment 4.9 (1980), 7.2 (1990), 7.9 (2000), 6.8 (2007); Participation 65.1 (1980), 65.7 (1990), 69.1 (2000), 71.9 (2007).
  - Italy: Unemployment 5.6 (1980), 9.1 (1990), 10.2 (2000), 5.9 (2007); Participation 61.3 (1980), 60.0 (1990), 60.0 (2000), 63.1 (2007).
  - United States: Unemployment 7.2 (1980), 5.6 (1990), 4.0 (2000), 4.6 (2007); Participation 63.8 (1980), 66.5 (1990), 67.1 (2000), 66.1 (2007).
- Table 2 (regional coefficient of variation, unemployment):
  - EU: 65.5 (1990), 60.1 (1995), 65.9 (2000).
  - Italy: 70.8 (1990), 63.9 (1995), 75.3 (2000).
  - United Kingdom: 47.1 (1990), 35.8 (1995), 53.0 (2000).
  - United States: 25.5 (1993), 27.0 (1995), 27.5 (2000).
- Table 4 (selected coefficient signs and significance):
  - Lagged productivity differential: 0.472*** (pooled), -0.394*** (fixed region), 0.306*** (random), -0.326*** (fixed region and time).
  - Index of coordination: -0.012* (pooled), -0.026*** (fixed region), -0.016*** (random), -0.014 (fixed region and time).
  - Adj. R-squared: 0.25 (pooled), 0.63 (fixed region), 0.11 (random), 0.66 (fixed region and time).
- Table 5 (IV estimates, exact coefficients):
  - Lagged unemployment differential: 0.130*** (fixed region), 0.108*** (fixed region and time).
  - Lagged productivity differential: -0.380*** (fixed region), -0.332*** (fixed region and time).
  - Index of coordination in wage bargaining: -0.044*** (fixed region), -0.032*** (fixed region and time).
  - Adj. R-squared: 0.62 and 0.65; Observations: 220.
- Table 6 (interaction terms, selected coefficients):
  - Index of coordination in wage bargaining * Productivity differential: -0.218** (fixed region), -0.177* (fixed region and time).
  - Adj. R-squared range across specifications: 0.63, 0.66, 0.64, 0.67.
  - Observations: 220.

*Source: IMF working paper content (regional analysis of wage bargaining coordination and regional wage differentials, 1980–2000).*

### REFERENCES

### _wp0843 - REFERENCES

### Key references on unions, collective bargaining, and wage-setting
- Aidt, Toke and Zafiris Tzannatos, 2002, Unions and Collective Bargaining, The World Bank, Washington DC.  
- Calmfors, Lars. and Driffill John, J., 1988, “Wage Structure, Corporatism and Macroeconomic Performance,” Economic Policy, 14–61.  
- Cukierman, Alex and Francesco Lippi, 1999, “Central Bank Independence, Centralization of  Wage Bargaining, Inflation and Unemployment: Theory and Some Evidence,” European Economic Review, vol.43, 1395–1434.  
- Dell'Aringa, Carlo and Laura Pagani, 2007, “Collective Bargaining and Wage Dispersion in  Europe,” British Journal of Industrial Relations, vol. 45, 29-54.  
- Flanagan, Robert J, Karl. O. Moene, and Michael Wallerstein, 1993, “Trade Union Behaviour, Pay-Bargaining, and Economic Performance,” in FIEF Studies in Labour Markets and Economic Policy, Oxford University Press, Clarendon Press.  
- Flanagan, Robert J., 1999, “Macroeconomic Performance and Collective Bargaining: An  International Perspective,” Journal of Economic Literature, vol. 37, 1150-1175.  
- OECD, 1997, “Economic Performance and the Structure of Collective Bargaining,” Employment Outlook, Chapter 3.  
- OECD, 2004, “Wage-setting Institutions and Outcomes,” Employment Outlook, Chapter 3.  
- Thomas, Alun, 2002, “The Costs and Benefits of Various Wage Bargaining Structures: An Empirical Exploration,” IMF Working Paper 02/71.  
- Vamvakidis, Athanasios, 2002, “Regional Wage Differentiation and Wage Bargaining Systems: The Case of Italy,” International Monetary Fund, Country Report No. 02/232, Chapter III.

### References on regional unemployment, labor markets, and wage differentiation
- Brunello, Giorgio, Claudio Lupi, and Patrizia Ordine, 2001, “Widening Differences in Italian Regional Unemployment,” Labour Economics, vol. 8, 103-129.  
- Demekas, Dimitri G, 1995, “Labour Market Institutions and Flexibility in Italy,” Review of Labour Economics and Industrial Relations, vol. 9, 3–43.  
- Nickell, Stephen, Luca Nunziata, Wolfgang Ochel and Glenda Quintini, 2003, “The Beveridge Curve, unemployment and Wages in the OECD from the 1960s to the 1990s,” in P. Aghion, R. Frydman, J. Stiglitz and M. Woodford (eds.), Knowledge, Information and Expectations in Modern Macroeconomics, In Honor of Edmund S. Phelps, Princeton University Press, Princeton.   
- OECD, 2000, “Disparities in Regional Labour Markets,” Employment Outlook, Chapter 2.  
- OECD, 2006, “General Policies to Improve Employment Opportunities for All,” Employment Outlook, Chapter 3.  
- Pench, Lucio R., Paolo Sestito and Elisabetta Frontini, 1999, “Some Unpleasant Arithmetics of Regional Unemployment in the EU: Are There Any Lessons for EMU?” Economic Papers, vol. 134.  
- Saint-Paul, Gilles, 1997, “Economic Integration, Factor Mobility and Wage Convergence,” Centre for Economic Policy, Research Discussion Paper No. 1597.  
- Vamvakidis, Athanasios, 2002, “Regional Wage Differentiation and Wage Bargaining Systems: The Case of Italy,” International Monetary Fund, Country Report No. 02/232, Chapter III.

### Theoretical and historical macroeconomic context
- Bruno, Michael, and Jeffrey D. Sachs, 1985, Economics of Worldwide Stagflation, Harvard University Press, Cambridge, Massachusetts.  
- Decressin, Anja and Jorg Decressin, 2002, “On Sand and the Role of Grease in Labor Markets,” IMF Working Paper 02/164.

*Source: _wp0843 - REFERENCES*

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