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Earnings Instability and Tenure

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Author Info

  • Cappellari, Lorenzo

    ()
    (Università Cattolica del Sacro Cuore)

  • Leonardi, Marco

    ()
    (University of Milan)

Abstract

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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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 2527.

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Length: 33 pages
Date of creation: Dec 2006
Date of revision:
Handle: RePEc:iza:izadps:dp2527

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Related research

Keywords: earnings instability; earnings dynamics; tenure; temporary contracts; minimum distance estimation;

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References

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  1. Andrea Brandolini & Piero Cipollone & Paolo Sestito, 2001. "Earnings Dispersion, Low Pay and Household Poverty in Italy, 1977-1998," Temi di discussione (Economic working papers) 427, Bank of Italy, Economic Research and International Relations Area.
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Citations

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Cited by:
  1. María Cervini-Plá & Xavier Ramos, 2012. "Long-Term Earnings Inequality, Earnings Instability and Temporary Employment in Spain: 1993–2000," British Journal of Industrial Relations, London School of Economics, vol. 50(4), pages 714-736, December.
  2. Caterina Giannetti & Marianna Madia & Luigi Moretti, 2014. "Job insecurity and financial distress," Applied Financial Economics, Taylor & Francis Journals, vol. 24(4), pages 219-233, February.
  3. SOLOGON Denisa & VAN KERM Philippe, 2014. "Earnings dynamics, foreign workers and the stability of inequality trends in Luxembourg 1988-2009," CEPS/INSTEAD Working Paper Series 2014-03, CEPS/INSTEAD.

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