Globalization and wage inequality: evidence from Italian local labor markets

Concerns about rising inequality and its economic, social and political consequences have been gaining traction in public discourse. However, despite a substantial body of research, the factors behind the rising inequality are still widely debated. This paper analyzes the impact of Chinese import penetration on the wage distribution using Italian administrative data on the universe of private, non-agricultural sector employees between 1991 and 2016. The findings show no support for the hypothesis that increased competition from Chinese imports has contributed to increased wage inequality in Italy. However, import penetration has had a negative effect on wages at different points of the distribution, leaving overall inequality substantially unaffected.