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Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria

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Author Info

  • Del Bono, Emilia

    () (ISER, University of Essex)

  • Weber, Andrea

    () (University of Mannheim)

Abstract

In this paper we investigate the existence of compensating wage differentials across seasonal and non seasonal jobs, which arise due to anticipated working time restrictions. We build on a theoretical model by Abowd and Ashenfelter (1981), which links the compensating wage differential to variation in individual unemployment through the effect of the unemployment insurance and the compensated labor supply elasticity. Since the Austrian labor market is characterized by an unusually high share of seasonal employment, our data provides the ideal setting in which to empirically test this model. We use the very rich information contained in the Austrian administrative records to derive a flexible definition of seasonal employment based on observed regularities in employment patterns. We find that employers pay on average a positive wage differential of about 11% for seasonal jobs and that the unemployment insurance system contributes a similar amount.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2242.

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Length: 55 pages
Date of creation: Aug 2006
Date of revision:
Publication status: published in: Journal of Labor Economics, 2008, 26(1), 181-221
Handle: RePEc:iza:izadps:dp2242

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Related research

Keywords: labor supply elasticity; wage differentials; seasonal employment; fixed effects panel estimation;

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References

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  1. Stiglbauer, Alfred M. & Stahl, Florian & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2002. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," IZA Discussion Papers 546, Institute for the Study of Labor (IZA).
  2. Richard Blundell & James Powell, 2001. "Endogeneity in nonparametric and semiparametric regression models," CeMMAP working papers CWP09/01, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  3. John Abowd & Orley Ashenfelter, 1980. "Anticipated Unemployment, Temporary Layoffs and Compensating Wage Differentials," Working Papers 517, Princeton University, Department of Economics, Industrial Relations Section..
  4. Whitney K. Newey & James L. Powell & Francis Vella, 1999. "Nonparametric Estimation of Triangular Simultaneous Equations Models," Econometrica, Econometric Society, vol. 67(3), pages 565-604, May.
  5. Lalive, Rafael, 2003. " Did We Overestimate the Value of Health?," Journal of Risk and Uncertainty, Springer, vol. 27(2), pages 171-93, October.
  6. Moretti, Enrico, 2000. " Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs," Journal of Risk and Uncertainty, Springer, vol. 20(1), pages 45-66, January.
  7. Hofer, Helmut & Pichelmann, Karl & Schuh, Andreas-Ulrich, 1998. "Price and Quantity Adjustments in the Austrian Labour Markets," Economics Series 57, Institute for Advanced Studies.
  8. Assaad, Ragui & Tunali, Insan, 2002. "Wage formation and recurrent unemployment," Labour Economics, Elsevier, vol. 9(1), pages 17-61, February.
  9. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February.
  10. Hamermesh, Daniel S & Wolfe, John R, 1990. "Compensating Wage Differentials and the Duration of Wage Loss," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S175-97, January.
  11. Topel, Robert H, 1984. "Equilibrium Earnings, Turnover, and Unemployment: New Evidence," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 500-522, October.
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