A simple model of production with heterogenous ability is developed. The median ability of employed workers is linked to the production elasticity of labor, causing an externality for individual firms. Due to this externality, an equilibrium allocation with a moderate level of unemployment is...

The Saint Valentine's decree (1984) and the ensuing hard fought referendum (1985), which reduced the automatisms of scala mobile, started a process of redefinition of wage fixing in Italy, which culminated with the final abolition of scala mobile (1992) and the approval of Protocollo d'intesa...