Using survey data on a sample of the Italian population, in this paper we offer a comprehensive account of which personal characteristics are associated to adequate financial competence and wise financial behaviour. The study uses five indicators of individual financial competence and behaviour and provides evidence on how each indicator is connected to individual characteristics such as gender, age, marital status, labour market status, income and education. Two indicators measure competence and awareness of the financial environment, while the remaining three capture specific elements of financial behaviour such as attitude towards budget constraints, propensity to save and planning for retirement. As expected, the pattern of correlations is rather homogeneous across the five indicators. In particular, we find that being a woman or being less educated is associated to less familiarity with the financial environment.

This paper investigates the reaction of active union members towards workplace organizational changes. We use micro-data from a large firm and estimate an empirical model which deals explicitly with the potential endogeneity of the union activist status. The data indicate that workers who become union activists are more likely to complain than members. Moreover, after proper allowance is made for the endogeneity of union activism, we find this effect to be reinforced. This result suggests that activists are not inherently against organizational changes, as compared to non-activists, though they report higher dissatisfaction in anticipation of the greater loss in union rents that is likely to be associated with the change.

We model a two-party electoral game with rationally inattentive voters. Parties are endowed with different administrative competencies and announce a fiscal platform to be credibly implemented in case of electoral success. The budgetary impact of each platform depends on the party's competence and on a stochastic implementation shock. Voters rely on the announced platform to infer a party's unobserved competence. In addition, voters receive noisy signals on the impact of each fiscal platform with noise depending ultimately on a voter's cognitive skills. We predict that the interplay between the desire of parties to win the election (the incentive to manipulate voters' beliefs) and voters' (lack of) cognitive skills (the scope for manipulation) distorts fiscal policies towards excessive budget deficits. The mechanism is that parties attempt to manipulate inferences on their competencies by implementing a loose fiscal policy. The predictions are tested empirically on a sample of advanced economies over years 1999-2008. Our results remain stable after controlling for potentially confounding differences across countries and over time, along with unobserved heterogeneity. Finally, alternative mechanisms potentially driving our results are investigated and ruled out.

In a dynamic stochastic monopoly union model we show that firing costs have a small and ambiguous impact on the level of employment if the union precommits to future wages. Further, in comparison with the commitment equilibrium and for very general union preferences, the no-commitment equilibrium exhibits higher wages and a lower employment level. Since commitment-like equilibria are more likely in cooperative bargain environments, these results suggest that, coeteris paribus, the interaction between employment protection and the quality of industrial relations reduces unemployment. We provide evidence on OECD countries which is consistent with this predictions.

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