This paper develops a tractable empirical approach to estimate the effect of on-the-job tenure on the permanent and the transitory variance of earnings. The model is also used to evaluate earnings instability associated with fixed-term contracts (short-tenure contracts) in Italy. Our results indicate that each year of tenure on the job reduces earnings instability on average by 15%. Workers on a fixed-term contract on average have an earnings instability 10% higher than workers on a permanent contract. Workers who spend their entire working life on fixed-term contracts can expect an earnings instability twice as high.
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Paper provided by Institute for Social and Economic Research in its series ISER working papers with number
2007-04.
Length: 30 Date of creation: 15 Feb 2007 Date of revision: Publication status: published Handle: RePEc:ese:iserwp:2007-04
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