Competition, firm size and returns to skills. Evidence from currency shocks and market liberalizations
We investigate the impact of product market competition on returns to skills in Italy using a longitudinal dataset on individual working histories. This impact is identified using three exogenous shocks affecting competition: the unforeseen devaluation of the Lira in 1992, its return to a fixed exchange regime in 1996 and the market liberalisation in the utility and transport sectors in the late 1990s-early 2000s. We analyse how firm heterogeneity and shocks of different types and signs affect the impact of competition on skill premia.