Incoronato, Lorenzo; (2024) Essays in Labour Economics. Doctoral thesis (Ph.D), UCL (University College London).

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Abstract

This thesis consists of three chapters on labour market policies and institutions. Chapter 1 studies a place-based industrial policy seeking to establish industrial clusters in Italy during the 1960s and 1970s. Leveraging historical and administrative data spanning one century and exploiting the program’s assignment criteria for identification, the analysis provides novel evidence of positive and long-lasting effects of place-based industrial policy, with local agglomeration of workers and firms enduring well after its termination. This persistence originates from sustained growth in the services sector, and especially in knowledge-intensive services. The promotion of high-technology manufacturing played a key role in these structural transformations, by boosting demand for business services and developing a skilled local workforce. Accordingly, there are large and persistent effects on local wages and human capital, consistent with agglomeration economies. Chapter 2 examines the long-run consequences of industrial policy on voting outcomes. It documents that communities that have benefitted of government transfers in the past continue to support state intervention in the economy, decades after transfers have elapsed. This result is not driven by incumbent voting, nor by economic conditions. The paper addresses alternative mechanisms linked to the sectoral composition of employment, migration, and individual attitudes towards the welfare state. Chapter 3 studies how collective bargaining institutions affect labour market outcomes. It focuses on bargaining decentralization through firm opt-out clauses, where firms can opt out of centralized agreements to negotiate directly with their employees. Leveraging unique matched employer-employee data, the analysis shows that workers experiencing an opt-out suffer wage losses but have higher employment stability. Similarly, opting out firms face lower labour costs and increased survival probabilities.

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