Testing for Independence of Wage Drift and Minimum Contractual Wage: An Empirical Investigation Using Italian Aggregate Time Series

A theoretical two-stage bargaining model for wage drift and minimum contractual wage is discussed and its implication in terms of Granger-causality between the two variables is tested by using Italian aggregate time series. Empirical evidence suggests rejecting the independence of the two series. This result has, in turn, implications for policy analysis. Our findings seem to indicate the appropriateness of a policy oriented towards decentralized wage setting.