Twenty Years after the Hot Autumn: Work and Politics in Italy from Rupture to Change

Abstract. In the first paper the authors make a critical analysis of the interpretations and models generally used for it caso italiano(the Italian Case) and propose explanations that are not one-sided, and that take into account all the elements of continuity which characterised the various phases of these last twenty years. The second paper examines the institutional features of the Italian industrial relations system, and underlines its ‘constant characteristic’. that is. its under-institutionalisation. The author emphasises the negative effects of these institutional shortcomings, and shows concern that the much exalted ‘flexibility’ of the Italian system could be detrimental, rather than positive, as it derives from these shortcomings. The note by Guido Romagnoli. attempts to use some theoretical statements on union behaviour, as the key to interpret the events of the Italian case. The author then indicates some aspects and reasons for the crisis of Italian unions. The fourth paper examines the relationship of the unions with the Italian political system over the last twenty years. This article suggests that it is characterised by considerable continuity in stabilising this political system, both in phases of strength and in times of weakness. This stabilising role has. however, not been reciprocated; in fact, not only has the political system not stabilised the unions and industrial relations, but has become a major obstacle to their strategic reorientation. The last paper in this group of essays on the Autunno Caldo offers what could be termed an ‘institutional’ explanation of union continuity, analysing the various phases of collective mobilisation. political exchange and flexibility, and examines the relationships between the social actors during these phases. The selection of papers published here is in memoriam of our colleague and friend Guido Romagnoli, who suddenly died shortly after the conference. For this reason it includes the outline that he presented at that conference which he could not develop into a full article.     

The Political System as a Problem for the Trade Unions in Italy: 1975-1983

ABSTRACT: This article focuses on a particular aspect of the evolution of the Italian trade unions, that is the problems faced by them in dealing with the political institutions and structures, or, in other words, the political system. We consider this period from the mid‘70s to the early 80s, because it represents the culmination of a gradual development in both unions and institutions during the previous years, and the resulting problems that evolved in the interaction between them and the political institutions. We look at how the unions’political action was modified during this lapse of time, and draw some conclusions about the unions resulting political role.     

Business Cycle Accounting

We propose a simple method to help researchers develop quantitative models of economic fluctuations. The method rests on the insight that many models are equivalent to a prototype growth model with time‐varying wedges that resemble productivity, labor and investment taxes, and government consumption. Wedges that correspond to these variables—efficiency, labor, investment, and government consumption wedges—are measured and then fed back into the model so as to assess the fraction of various fluctuations they account for. Applying this method to U.S. data for the Great Depression and the 1982 recession reveals that the efficiency and labor wedges together account for essentially all of the fluctuations; the investment wedge plays a decidedly tertiary role, and the government consumption wedge plays none. Analyses of the entire postwar period and alternative model specifications support these results. Models with frictions manifested primarily as investment wedges are thus not promising for the study of U.S. business cycles.     

THE POLITICAL ECONOMY OF FLEXICURITY

We document the presence of a trade‐off in the labor market between the protection of jobs and the support offered to unemployed people. Different countries’ locations along this trade‐off represent stable political‐economic equilibria. We develop a model in which individuals determine the mix of job protection and support for the unemployed in a political environment. Agents are heterogeneous along two dimensions: employment status (insiders and outsiders) and skills (low and high). Unlike previous work on the political economy of labor market institutions, we emphasize the role of job protection and unemployment benefits in the wage‐setting process. A key implication of the model is that flexicurity configurations with low levels of job protection and high levels of support to the unemployed should emerge in the presence of a highly educated workforce. Panel regressions of countries’ locations along this institutional trade‐off are consistent with the implications of our model.     

Information Acquisition and Voluntary Disclosure in an Export‐Processing System

We study a strategic information management problem in the export‐processing trade, where the buyer controls the raw material input and sales and the producer is responsible for production. The production is vulnerable to random yield risk. The producer can exert a costly effort to acquire the private yield rate information and discretionarily share it with the buyer. We develop a sequential Bayesian game model that captures three key features of the system—endogenous information endowment, voluntary disclosure, and ex post information sharing—a significant departure from the literature. The optimal disclosure strategy is driven by the trade‐off between the gains from Pareto efficiency improvement and self‐interested overproduction. It is specified by two thresholds on yield rate: only the middle‐yield producers (with yield rate between these two thresholds) share private information to improve supply‐demand match; the low‐ and high‐yield producers withhold information to extract excess input from the buyer. The buyer in response penalizes nondisclosure with reduced input and rewards information sharing with a larger order. This strategic interaction is further exacerbated by the double marginalization effect from decentralization, resulting in severe efficiency loss. We examine the effectiveness of three corrective mechanisms—vertical integration, mandatory disclosure, and production restriction—and reveal the costs of information suppressive effect and overinvestment incentive and the benefit from concessions on the processing fee. Our study endogenizes the asymmetric supply risk and provides the first attempt to rationalize the strategic interactions of informational and operational incentives in the export‐processing system.     

A Social Welfare Theory of Trade Unions

There have been recent advances in the understanding of trade unions by modeling union objectives as maximizing a neoclassical utility function. While this literature is most relevant for autonomous and homogeneous local unions, there are also numerous large, heterogeneous trade unions in many countries. This paper illustrates that social choice theory presents a more realistic framework for explicitly modeling the aggregation of potentially diverse preferences within trade unions.     

Waiting for News in the Market for Lemons

We study a dynamic setting in which stochastic information (news) about the value of a privately informed seller's asset is gradually revealed to a market of buyers. We construct an equilibrium that involves periods of no trade or market failure. The no‐trade period ends in one of two ways: either enough good news arrives, restoring confidence and markets reopen, or bad news arrives, making buyers more pessimistic and forcing capitulation that is, a partial sell‐off of low‐value assets. Conditions under which the equilibrium is unique are provided. We analyze welfare and efficiency as they depend on the quality of the news. Higher quality news can lead to more inefficient outcomes. Our model encompasses settings with or without a standard static adverse selection problem—in a dynamic setting with sufficiently informative news, reservation values arise endogenously from the option to sell in the future and the two environments have the same equilibrium structure.     

The Inadequacy of Mainstream Theories ofTrade Union Behaviour

This paper identifies four criteria used by mainstream economists of trade unions to judge the adequacy of their various theories. Three of them, however, are hardly ever satisfied. The root cause of this failure is the method adopted by mainstream economic theory, namely deductivism. The perspective of critical realism is used to identify and explain the cause of this failure and to point towards an alternative method.     

Bayesian and Dominant‐Strategy Implementation in the Independent Private‐Values Model

We prove—in the standard independent private‐values model—that the outcome, in terms of interim expected probabilities of trade and interim expected transfers, of any Bayesian mechanism can also be obtained with a dominant‐strategy mechanism.     

Underemployment Benefit Effects on Employment and Income Distribution: What We Should Learn from the System of the Cassa Integrazione Guadagni

ABSTRACT: Two aspects distinguish the Cassa Integrazione Guadagni (CIG) from most other European under or unemployment public benefit schemes: an institutionally fixed replacement ratio and a rotation principle imposing a labour-sharing regime. Within a labour-sharing approach, the comparison between the CIG unitary subsidy proportioned to the corresponding wage rate and the European standard fixed in nominal terms, shows that, ceteris paribus, employment is lower and profits are higher in the former system. Moreover, given the indexation provided by CIG, aggregate supply is vertical in this system while it is positively sloped in the other. Consequently, employment, real profits and real wages are constant in the former case, while they are positively correlated to the good quality of the states of nature in the latter. If the tax-based financing of public benefits is not — as it is not in Italy — experience-rated, the CIG regime induces moral hazard behaviours harmful to the State: it leads firms and unions to agree on relatively high wages, thus raising the value of both working and non-working time. Without affecting the unions’average requests and the firms’profits, this attitude reduces employment and increases under or unemployment public subsidies.     

Manufacturing in the Nineties By H.J. STRUDEL and P.DESRUELLE(Van Nostrand Reinhold,New York, 1992). £31.50.

Abstract

Looking for a world model for the manufacturing information flow diagram has brought us to the conclusion that it is impossible to build an all-encompassing, all-inclusive system. The redundancy and overlap would make the system excessively complex and ineffective. The best way to generalize a model of this type is to simplify. The result is that we eliminate nearly the entire production control mechanism that is found in the labour intensive MRP system (Fig. 1). We come up with a system that is much closer to the material intensive JIT system (Fig. 2). The conclusion is that effective production control requires that you choose which resource you wish to optimize, and then select a system that controls the plant around the selected resource base. This is the function of books like International Management and Production. A second conclusion would be that complexity (MRP—Fig. 1) gains very little over simplicity (JIT—Fig. 2 or World Model—Fig. 4) in productivity or efficiency. As Shozo Hibino says in his book Breakthrough Thinking, we need to run our plants smarter, not harder.     

Urban Versus Rural Return to Human Capital in Portugal: A Cookbook Recipe for Applying Assignment Models

Abstract. The Portuguese economy has been characterized by modernization since the post‐war period, and Lisbon is a centre of this process. This paper analyses rates of return on human capital in Lisbon versus the rest of the country in the period 1982–92. An assignment model of heterogeneous workers to heterogeneous jobs is applied. We introduce the concept of the complexity dispersion parameter, which measures job heterogeneity and the ease of substitution between worker types. It is free dimension and can be compared across countries. We also develop a cookbook recipe for the estimation of this parameter. The main implication of the model — a high return to human capital is associated with similar workers being assigned to more complex jobs — is confirmed by the data. The complexity dispersion parameter suggests that paying half of the optimal wage level at least doubles the cost per efficiency unit of labour.     

The Good,the Bad,and the Ugly of Corporate Personhood and Corporate Political Spending: Implications for Shareholders

In the Citizens United v. Federal Election Commission (2010) decision, the Supreme Court rendered an opinion verifying the legality of unions and corporations to spend funds from their general treasuries to finance independent expenditures related to political and electioneering communications. Such speech and communications are constitutionally protected by the First Amendment, according to Justice Kennedy, who wrote the majority opinion (558 U.S. 22, 2010). The dissenting opinion questioned whether such rights should accrue to corporations, since corporations differ from constitutionally‐protected “natural persons” (dissent, 558 U.S. 50 at 2, 2010; Johnson 2011 ). The decision ignited a firestorm of controversy, which renewed interest in the legal concept of corporate personhood. This article reviews key findings in the Citizens United v. FEC case, then describes the historical, legal, and theoretical concepts of corporate personhood with the goal of unbundling the nuanced consequences of the majority and dissenting opinions of the Citizens United v. FEC case. The analysis then turns to a shareholder perspective, with particular emphasis on the implications for shareholders’ rights and responsibilities. It concludes with an exploration of options available to shareholders concerned about how to respond when a corporation uses its resources to communicate political opinions at odds with their own.     

Prospects for industrial co-operatives—An alternative to industrial democracy?

There is a growing interest in industrial co-operatives, although the idea itself is by no means a modern one, having long been regarded as the ideal of a socialist system. There are comparatively few worker co-operatives in the United Kingdom, but rather more of them on the Continent. The article examines the reasons for this and the problems facing co-operatives —particularly in relation to the law, taxation and the trade unions.     

Trade Union Action and Privatisation in Western Europe: Recent Dilemmas*

Abstract. The Author examines the policies of privatisation in Western Europe and the responses made by trade unions. Privatisation seems to induce the trade union movement to shift its emphasis from traditional issues toward new and challenging ones, such as a major co-operation in the management of the privatised companies. Therein, the extension of interest and control by the unions into new areas such as investment, planning, work organisation and design constitute a challenge to trade union core mandate. In some union circles there are fears about unions embracing what appear to be managerial strategies in a period of deep transformation and turbulence. Moreover, according to some union leaders any attempt by the unions to go beyond the “oppositional and defensive role” would result in a confusion and misrepresentation of their members' interests.     

How and When Servant Leaders Enable Collective Thriving: The Role of Team–Member Exchange and Political Climate

Thriving teams are critical to the effective functioning of an organization. Extending Spreitzer et al.’s (2005) socially embedded model of thriving at work to the team level, this study explores how and when servant leadership promotes collective thriving. Through data collected from 80 teams composed of 520 employees, the study reveals that servant leaders help embed members in high‐quality team–member exchange relationships, which in turn enables their collective thriving. The authors find that a highly political climate is a dual‐stage moderator hindering the positive impact of servant leadership on collective thriving. The findings move forward extant servant leadership and thriving literature. The authors also offer practical implications for how organizations can nurture and reap benefits from thriving teams and the active role of employees in this process.     

ARTIFICIAL STATES

We define artificial states as those in which political borders do not coincide with a division of nationalities desired by the people on the ground. We propose and compute for most countries in the world two measures of the degree to which borders may be artificial. One measures how borders split ethnic groups into two separate adjacent countries. The other measures the straightness of land borders, under the assumption the straight land borders are more likely to be artificial. We then show that these two measures are correlated with several measures of political and economic success.     

Unions and the Welfare Impact of Foreign Direct Investment — A Wisdom Extension

Abstract. This paper extends the recent literature, e.g. Leahy and Montagna (Economic Journal 110: 80–92, 2000), in relation to the link between unionization, inward foreign direct investment (FDI) and country welfare in an oligopoly market structure. It is shown that the common results, that unions may reduce welfare under FDI while multinational enterprises (MNEs) will strictly trade off union wages at each location, are generally driven by the assumption relating to the scope of the bargaining with the union, namely the ‘right to manage’ (RTM). In particular, our extension to efficient bargaining (EB) demonstrates that union power may increase welfare in the presence of FDI, while the MNEs’ choice between FDI and exports will include profit‐sharing arbitrage with unions, in addition to the usual wage comparison considerations.     

THE POLITICAL COLOR OF FISCAL RESPONSIBILITY

We propose a dynamic general equilibrium model that yields testable implications about the fiscal policy run by governments of different political color. Successive generations of voters choose taxation, expenditure, and government debt through repeated elections. Voters are heterogeneous by age and by the intensity of their preferences for public good provision. The political equilibrium switches stochastically between left‐ (pro‐public goods) and right‐leaning (pro‐private consumption) governments. A shift to the left (right) is associated with a fall (increase) in government debt, an increase (fall) in taxation, and an increase (fall) in government expenditures. However, left‐leaning governments engage in more debt accumulation during recessions. These predictions are shown to be consistent with the time‐series evidence for the United States in the postwar period, and also with the evidence for a panel of OECD countries. (JEL: D72, E62, H41, H62, H63)     

基于ITIM模型的政治争端事件对产业经济系统的影响评估

本文在考虑事件恢复期的情景下,扩展了Jung^[7]的针对进出口国际贸易的非正常投入产出模型。将2012年中日"钓鱼岛事件"视为一类政治争端事件,在几个假设前提下,评估该事件给中国的产业经济系统带来的间接经济损失,并筛选出对该事件较为敏感的产业。结果表明:"钓鱼岛事件"严重影响了中日贸易,2012年中日进出口贸易总额同比减少134.3716亿美元,考虑到产业经济系统内部的技术经济关联性,估算出"钓鱼岛事件"带来的静态间接经济损失区间为;然后假设"钓鱼岛事件"在1年、2年、3年、5年、10年和15年内得以解决,分别计算了该事件带来的间接经济损失区间;筛选出了"钓鱼岛事件"的高敏感行业:通用、专用设备制造业、电气机械及器材制造业、化学工业、金属冶炼及压延加工业和金属制品业等。最后提出了相应的政策建议。本文的研究方法可为类似事件的损失评估提供借鉴,研究结果可为政府、行业管理部门和相关企业提供参考。