Abstract
In this paper, we estimate series of the skill premium for Italy during the early stages of the industrialization with a refined version of the regression approach originally introduced by Clark (J Polit Econ 113(6):1307–1340, 2005). We compute series for the whole country as well as separate series for macro-regions and for construction and manufacturing, and, within manufacturing, we estimate high and low skill premia for blue collars. We interpret the results with an extended version of the classic Katz and Autor (in: Ashenfelter, Card (eds) Handbook of labor economics, Elsevier, Dordrecht, pp 1463–1555, 1999) framework. The overall premium remained stable until the 1890s and then declined for the joint effect of migrations (almost exclusively of unskilled workers) and the rise in literacy, which was not compensated by the modest increase in industrial employment.
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Sources Wages, this study. Regional shares in total population: our own elaboration on Census data. Occupational shares in agriculture, construction, manufacturing, and mining: Broadberry et al. (2013). Notes: the “sector-specific” estimate of the Italian skill premium starts in 1876 due to the lack of wage data for all sectors before that date
Sources This study and Federico et al. (2019)
Sources Italy, this study. Other countries, Betrán and Pons (2013). Notes: the French data are consistent with the benchmark estimates for 1896 and 1911 reported in Bayet (1997, Tab. 5, p. 169)
Sources Education: literacy rates of brides and grooms from Annuario Statistico Italiano; Data on technical education from Vasta (1999). Population aged more than 15 years from ISTAT, Statistiche storiche online database. Intervening values have been interpolated linearly. The series labelled “workers trained in technical schools” represents the stock of workers trained in technical schools (Istituti tecnici and Scuole di arti e mestieri) computed on the population aged 15 years or more assuming 40-year work-life after the end of the education. Migration: Migration data from ISTAT, Annuario statistico dell’emigrazione italiana (1926) tables I and VII (unskilled includes farmers (agricoltori) and unskilled workers (terraioli, braccianti); Population, current boundaries, from ISTAT, Statistiche storiche, online database. Capital stock: Machinery and equipment from Broadberry et al. (2013). Strikes: Annuario Statistico Italiano (1905–1907; 1911–1914)
Sources MAIC—Statistica degli Scioperi (1907, 1908, 1911, 1912a, 1912b, 1913, 1914, 1915, 1916). Notes: The source reports the total wage bill lost by strikers and the total days of strike. Wages of different type of male workers have been computed using the share of male strikers reported in the Statistica degli Scioperi of 1913 (MAIC—Statistica degli Scioperi 1916) and the gender wage gap estimated in Fig. 7
Source our own elaboration on Census data. For 1861, data by age are not available for 5 and 6 years
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Notes
The other pillars of Allen’s standard model are the construction of a national transport infrastructure for creating a large national market, an external tariff for protecting “infant” industries, and the establishment of banks to stabilize the currency and provide business with capital.
Milanovic (2016) acknowledges the possible existence of Kuznets waves of inequality also in preindustrial societies, but their nature is fundamentally different from those taking place after the Industrial Revolution.
For recent estimates of inequality in Italy during the Liberal age, see Amendola and Vecchi (2017).
For an updated review, see Olivetti and Petrongolo (2016).
There are two recent contributions on the evolution of Italian real wages in the period 1861–1913: Daniele and Malanima (2017) and Federico et al. (2019), but they are both focused on the divergence in living standard and economic performance between the north and the south, rather than on the dynamics of the skill premium in this historical phase.
In this framework, globalization would affect the skill bias via the effects on skill intensity and composition of VA by sector. This may include a change in exports towards more skill-intensive products, but this is not strictly necessary.
We have estimated provincial series of daily wages in agriculture from these data with information on the number of days for each task in the crop year from technical sources (for details, see Federico et al. 2019).
A complete list of the sources is provided in “Appendix 2”.
We omit workers with some managerial roles, most notably the “capomastri” in construction sector, since their skills are not strictly related to the ability of performing specific production tasks.
A simple measure of this variety is the cross-sectional coefficient of variation of wages by year, which is the more meaningful the larger is the number of observations (we have only eight years with more than 100 observations). The coefficient, for males only, is very high in the early period (0.52 in 1859, 0.47 in 1866, 0.45 in 1874) and then drops to about 0.30 in the 1900s (0.26 in 1903, 0.29 in 1904, 0.30 in 1906 and 1907 and 0.27 in 1911).
The weight on observation i (\( w_{i} \)) is given by the share of the region r in the national population in year t (\( sh_{rt} \)) divided by the number of observations of region r in year t (\( n_{rt} \)): \( w_{i} = \frac{{sh_{rt} }}{{n_{rt} }} \).
We use three-year periods in order to have enough observations for the regression model estimates with interaction (not for smoothing).
We estimate the following equations for the gender wage gap, the sectoral, and area-specific skill premia, respectively:
$$ \ln \left( {w_{\text{p}} } \right) = \alpha + \mathop \sum \limits_{i = 0}^{1} \mathop \sum \limits_{j = 1}^{J} \beta_{ij} GENDER_{i} PERIOD_{j} + \gamma SKILL + \mathop \sum \limits_{k = 1}^{K} \delta_{k} SECTOR_{k} + \mathop \sum \limits_{l = 1}^{L} \theta_{l} SOURCE_{l} + \mathop \sum \limits_{m = 1}^{M} \varphi_{m} LOC_{m} + \varepsilon_{\text{p}} $$$$ \ln \left( {w_{\text{p}} } \right) = \alpha + \mathop \sum \limits_{i = 0}^{1} \mathop \sum \limits_{j = 1}^{J} \mathop \sum \limits_{k = 1}^{K} \beta_{ijk} SKILL_{i} PERIOD_{j} SECTOR_{k} + \gamma GENDER + \mathop \sum \limits_{l = 1}^{L} \theta_{l} SOURCE_{l} + \mathop \sum \limits_{m = 1}^{M} \varphi_{m} LOC_{m} + \varepsilon_{\text{p}} $$$$ \ln \left( {w_{\text{p}} } \right) = \alpha + \mathop \sum \limits_{i = 0}^{1} \mathop \sum \limits_{j = 1}^{J} \mathop \sum \limits_{m = 1}^{M} \beta_{ijm} SKILL_{i} PERIOD_{j} LOC_{m} + \gamma GENDER + \mathop \sum \limits_{k = 1}^{K} \delta_{k} SECTOR_{k} + \mathop \sum \limits_{l = 1}^{L} \theta_{l} SOURCE_{l} + \varepsilon_{\text{p}} $$We interpret the results of these series in Sects. 5, 6, and 7.
Unskilled wages in agriculture and the building industry followed a similar trend also in France between 1250 and 1860 (Ridolfi 2019).
According to Frankema and Van Waijenburg (2019), in the nineteenth century, skill premia in Africa and Asia were very high relative to Europe but with the growth in school attainment rates, these rapidly converged to the levels prevailing in Western European countries during the twentieth century.
According to Ortaggi Cammarosano (1991, p. 181): “one of the most constant discrimination against women was their low level of wages. In agricultural as in industrial work, for work done at home as well as in the factory, women received half the wages for men for doing the same job. This ratio remained constant over many decades […]. It testified to the presence of custom and attitudes which went very far back in time”.
The average age at marriage (1865–1913) was 29 years and 6 months for men and 25 years and 4 months for women (seriestoriche.istat.it, Table 3.6).
This increase suggests a change in the nature of Italian emigration. Until the end of the twentieth century, Italian emigrants were almost exclusively males looking for jobs. Subsequently, some of these emigrants started to settle abroad and they were reached by their families. Thus, the “not in workforce” category includes chiefly housewives and small children. The share is indeed lower than emigrants younger than 15 years.
Using height data, Spitzer and Zimran (2018) have shown that Italian migration in the USA was negatively selected at the national level, but positively selected at the provincial level.
See also Nuvolari and Vasta (2017) for an analysis of the spatial patterns of inventive activity in Italy in the period 1861‒1913 using patent data.
For a description of Italian trade database, see Federico and Vasta (2015).
We compute cumulating imports under the assumption of 17-year life-cycle (from Giordano and Zollino 2015). Accordingly, the initial imported capital stock in 1862 is assumed 85 million lire—equivalent to 17 times the import value of that year.
Advanced industry includes metal-making, engineering, chemicals, printing and publishing, rubber and plastics, and utilities. The denominator is the sum of manufacturing and utilities. Data for 1871 come from Ciccarelli and Missiaia (2013, Table C.1), who reproduce the census figures without correction. Data for 1881, 1901, and 1911 are taken from Vitali (1970, Table 3), who adjusts for different minimum ages but not for the inconsistent treatment of women employment. The 1881 census classified as workers all females who were employed part time at home, while the other censuses included only full-time workers (Mancini 2018). The effect was particularly large in textile industries in the south. Thus, we correct by extrapolating backwards the number of females in 1901 with the rate of change of male employment from 1881 to 1901.
The number of strikers in agriculture peaked in 1907 (254,000).
Note that, potentially, strikes on hours might increase wages, if they achieved a cut in hours worked with the same salary. We neglect this issue as all our data refer to days of work rather than hours. The following discussion refers to the number of strikes, which is the only information about motivation and outcome available in the source. We have to implicitly assume that the average number of strikers was equal.
We have estimated the wage of male strikers using the following formula: ws = a · wsm + (1 − a) · b ·wsf, where ws is the average wage of strikers, a is the share of male strikers, b is the gender wage gap, and wsm and wsf are the wages of male and female strikers, respectively. This formula yields: wsm = ws/[a + (1 − a) · b]. The share a is taken from MAIC—Statistica degli scioperi (1916); this share is obtained by interpolating the values between 1903 and 1913. The gender wage gap is taken from Fig. 7.
This discontinuity is broadly consistent with the results of the econometric analysis by Felice and Carreras (2012) on the pattern of Italian industrialization.
We consider only males as they accounted for four-fifths of migrants.
The exact value of the elasticity is irrelevant, as it cancels itself out in the final formula.
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Acknowledgements
We would like to thank Maria Angeles Pons and Mauro Rota for sharing their data with us and Gabriele Cappelli, Giulia Mancini, Luca Mocarelli, and Tiziano Razzolini for very useful comments and suggestions. We thank Alberto Montesi and Sara Pecchioli for excellent research assistance. The paper has benefited from the comments of all participants at the 8th edition of EH/tune Economic History Workshop (Siena, 2018), the FRESH meeting (Groningen, 2018), the Economic History Society Annual Conference (Belfast, 2019), the BETA Workshop (Strasbourg, 2019), the 16th Annual STOREP Conference (Siena, 2019), the European Historical Economics Society Conference (Paris, 2019), and the Université Paris 1 Panthéon-Sorbonne’s International economics and labor markets seminar (Paris, 2019).
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Appendices
Appendix 1
See Figs. 15, 16, and 17 and Tables 5, 6, 7, 8, 9, 10, 11, 12, and 13.
Wage observations by year and skill level in manufacturing
Wage observations by region and macro-area
Sources and Notes as in Fig. 9
Wages of strikers in manufacturing in Italy (1903–1913).
Appendix 2: List of sources for wages
2.1 Primary sources
ISTAT-DGS-MAIC (1885) Annali di statistica, Serie III, vol. 14. Tipografia eredi Botta, Roma.
ISTAT-DGS (1887) Annuario Statistico ltaliano 1886. Tipografia eredi Botta, Roma.
ISTAT-DGS (1888) Annuario Statistico ltaliano 1887–1888. Tipografia eredi Botta, Roma.
ISTAT-DGS (1893) Annuario Statistico ltaliano 1892. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1904) Annuario Statistico ltaliano 1904. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1908) Annuario Statistico ltaliano 1905–1907. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1912) Annuario Statistico ltaliano 1911. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1913) Annuario Statistico ltaliano 1912. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1914) Annuario Statistico ltaliano 1913. Tipografia nazionale G. Bertero, Roma.
ISTAT-DGS (1915) Annuario Statistico ltaliano 1914. Tipografia nazionale G. Bertero, Roma.
MAIC (1904–1922) Bollettino dell’Ufficio del lavoro. Tipografia nazionale G. Bertero, Roma (ad annum).
MAIC—Ministero di Agricoltura, Industria e Commercio (1905) Materiali per lo studio delle condizioni dei lavoratori della terra nel Mezzogiorno, vol 1 Capitanata e Puglie. Pubblicazioni dell’Ufficio del Lavoro, Roma.
MAIC—Ministero di Agricoltura, Industria e Commercio, Ufficio del lavoro (1908) Notizie sulle variazioni dei Salari e degli orari nell’industria serica italiana dal 1901 al 1907. Officina poligrafica italiana, Roma.
MAIC—Ministero di Agricoltura, Industria e Commercio, Ufficio del lavoro (1910) Le condizioni di lavoro nell’industria laterizia in Italia. Officina poligrafica italiana, Roma.
MAIC—Ministero di Agricoltura, Industria e Commercio, Ufficio del lavoro (1911) Salari ed orari nell’industria edilizia in Italia negli anni 1906–1910. Officina poligrafica italiana, Roma.
MAIC—Ministero di Agricoltura, Industria e Commercio, Ufficio del lavoro (1911) Salari ed orari nell’industria serica italiana nell’anno 1909. Officina poligrafica italiana, Roma.
MAIC—Ministero di Agricoltura, Industria e Commercio (1913) Tariffe di salario e di orario nell’arte muraria (1911 e 1912). Officina poligrafica italiana, Roma.
MAIC-DGA—Ministero di Agricoltura, Industria e Commercio—Direzione Generale dell’Agricoltura (1876–1879) Relazione intorno alle condizioni dell’agricoltura in Italia nel quinquennio 1870–74. Tipografia Barbera, Roma.
MAIC-DGS—Ministero di Agricoltura, Industria e Commercio—Direzione Generale di Statistica (1862–1878) Salari. Prezzi medi di un’ora di lavoro degli operai addetti alle opere di muratura ed ai trasporti di terra e mercedi medie giornaliere degli operai addetti alle miniere. n. d., Roma.
2.2 Secondary sources
Aleati G (1961) Le retribuzioni dei lavoratori edili in Milano, Pavia e nei rispettivi territori dal 1819 al 1890. ILTE, Torino.
De Maddalena A (1974) Prezzi e mercedi a Milano dal 1701 al 1860. Banca Commerciale Italiana, Milano.
Di Rollo F (1965) Le retribuzioni dei lavoratori edili a Roma dal 1826 al 1880. ILTE, Torino.
Felloni G (1963) Le retribuzioni dei lavoratori edili a Genova dal 1815 al 1890. ILTE, Torino.
Felloni G (1998) Un secolo di salari edilizi a Genova 1815–1913, pp. 1217–1230, «Atti della Società Ligure di Storia Patria, nuova serie», XXXVIII/2.
Hansen B (1985) Wage Differentials in Italy and Egypt. The Incentive to Migrate before World War I. J Eur Econ Hist 14(2):347.
Levi G (1966) I salari edilizi a Torino dal 1815 al 1874. In: Maturi W (ed) Miscellanea. Giappichelli, Torino pp 366, 372, 378.
Societa Umanitaria (1907) Le condizioni generali della classe operaia in Milano: Salari, Giornate di lavoro, Reddito, ecc. Editore l’Ufficio del lavoro, Milano.
Appendix 3: Estimate of the effects of emigration
We follow the partial equilibrium approach by Taylor and Williamson (1997). By definition, the effect of a change in labour supply L* on wages is equal to the labour supply change times the elasticity of labour demand η:
Taylor and Williamson (1997) show that η−1 is equal to:
where σ is the elasticity of substitution in the production function and θ is the share of labour. We compute separately the effects on skilled and unskilled wages, assuming the elasticity to be the same. We estimate w* with two different no-emigration counterfactual hypotheses. We compute total migration since 1876 (‘long run’) or 1903 (‘short run’), and we compare it with (an estimate of) the number of skilled and unskilled workers in 1911.
We retrieve the total number of emigrants, gross and (since 1902) net, the division by gender, and the share of ‘condizioni professionali’ (working) from Statistiche ISTAT (Tables 2.9.1 and 2.9.2) and the number of emigrated farming emigrants (labourers, farmers, and tenants) from Annuario Statistico dell’emigrazione (Commissariato generale dell’emigrazione, various years). We compute the total number of working male emigrants as net migrants times the share of males in total migrants (assuming the same percentage of returns for males and females) times the share of working people for both genders.Footnote 32 This latter assumption clearly understates the number of working males, as the share of workers was substantially higher for males than for females. We assume that all farmers and 15% of other (non-farming) emigrants were unskilled. This yields a total of 6.1 million unskilled and 0.7 million skilled migrants in the long run (and, respectively, 2.6 and 0.4 since 1903). We get the number of male workers by sector in 1911 from Vitali (1970, tab. 1). We count as unskilled all males working in agriculture, 42% of workers in construction (MAIC-DGS, Population census of 1911, vol. V, tab. 7, p. 345) and 25% of workers in manufacturing and services for a total of 7.6 million out of 11.2 million males in gainful occupation. This implies that skilled workers (3.7 million) accounted for 32.7% of the total. The long-run no-emigration counterfactual amounts to an increase in the workforce of 80% for unskilled and 19.5% for unskilled workers (35% and 10.5% for the short run). According to Giordano and Zollino (2015), labourers got 66% of GDP in 1911. We disaggregate this share between raw labour (of all workers) and human capital (of skilled ones only) as:
where Lu and Ls are total unskilled and skilled workers, respectively, and s, the skill premium, is assumed to have been 1.5. The formula yields a share of 41.7% for raw labour and 24.2% for human capital. Thus, with a unitary elasticity σ = 1 (i.e. a Cobb-Douglass), demand elasticities are equal to − 0.58 and − 0.76.Footnote 33 Without emigration, wages of unskilled and skilled workers would have been 43% and 17.4% lower, respectively, while the skill premium would have been 39% higher.
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Federico, G., Nuvolari, A., Ridolfi, L. et al. The race between the snail and the tortoise: skill premium and early industrialization in Italy (1861–1913). Cliometrica 15, 1–42 (2021). https://doi.org/10.1007/s11698-019-00200-2
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DOI: https://doi.org/10.1007/s11698-019-00200-2