Wage dispersion in Italy

Abstract

This article analyzes wage dispersion in a sample of Italian firms, by taking advantage of a unique Linked Employer-Employee dataset (LEED) merging four data sources from the National Institute of Statistics. An in-depth descriptive analysis conveys that knowledge-intensive services record the highest within- and between-firms wage dispersion in the sample. Regression-based results show that innovation does not drive up inequality in large companies. However, it can contribute to enlarge the within-firm wage dispersion as well as the wage gap across small firms.