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Long Term Earnings Inequality, Earnings Instability and Temporary Employment in Spain: 1993–2000

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Author Info
Cervini, María () (Universitat Autònoma de Barcelona)
Ramos, Xavi () (Universitat Autònoma de Barcelona)

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Abstract

This paper provides a longitudinal perspective on changes in Spanish male earnings inequality for the period 1993-2000, by decomposing the earnings covariance structure into its permanent and transitory parts. According to the Spanish sample of the European Community Household Panel, cross-sectional earnings inequality of male full-time employees falls over the second half of the Nineties. The longitudinal analysis shows that such decline was determined by a decrease in earnings instability and an increase of the permanent earnings component. Given the marked decline in temporary employment over the sample period, we also examine the effect of the type of contract on earnings variance components, and we find that workers with fixed-term contract have on average more instability than workers with permanent contract. This evidence suggests that the decline in temporary employment is responsible for the decreasing earnings instability.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3538.

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Length: 23 pages
Date of creation: Jun 2008
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Handle: RePEc:iza:izadps:dp3538

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Related research
Keywords: earnings dynamics; permanent and transitory differences; earnings instability; covariance structure; minimum distance; temporary employment; Spain;

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Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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References listed on IDEAS
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  1. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages F189-F213, June. [Downloadable!] (restricted)
    Other versions:
  2. Martin Biewen, 2005. "The Covariance Structure of East and West German Incomes and its Implications for the Persistence of Poverty and Inequality," German Economic Review, Blackwell Publishing, vol. 6(4), pages 445-469, November. [Downloadable!] (restricted)
    Other versions:
  3. Richard Blundell & Ian Preston, 1998. "Consumption Inequality And Income Uncertainty," The Quarterly Journal of Economics, MIT Press, vol. 113(2), pages 603-640, May. [Downloadable!] (restricted)
    Other versions:
  4. Baker, Michael, 1997. "Growth-Rate Heterogeneity and the Covariance Structure of Life-Cycle Earnings," Journal of Labor Economics, University of Chicago Press, vol. 15(2), pages 338-75, April. [Downloadable!] (restricted)
  5. Kugler, Adriana & Jimeno, Juan F. & Hernanz, Virginia, 2002. "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labor Market Reforms," IZA Discussion Papers 657, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  6. Leonardi, Marco, 2003. "Earnings Instability of Job Stayers and Job Changers," IZA Discussion Papers 946, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Dickens, Richard, 2000. "The Evolution of Individual Male Earnings in Great Britain: 1975-95," Economic Journal, Royal Economic Society, vol. 110(460), pages 27-49, January. [Downloadable!] (restricted)
  8. Julián Messina & Giovanna Vallanti, 2007. "Job Flow Dynamics and Firing Restrictions: Evidence from Europe," Economic Journal, Royal Economic Society, vol. 117(521), pages 279-301, 06. [Downloadable!] (restricted)
    Other versions:
  9. Robert A. Moffitt & Peter Gottschalk, 2002. "Trends in the Transitory Variance of Earnings in the United States," Economic Journal, Royal Economic Society, vol. 112(478), pages C68-C73, March. [Downloadable!] (restricted)
  10. Adriaan S. Kalwij & Rob Alessie, 2003. "Permanent and Transitory Wage Inequality of British Men, 1975-2001: Year, Age and Cohort Effects," Working Papers 03-04, Utrecht School of Economics. [Downloadable!]
    Other versions:
  11. Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: a Honeymoon Effect?," Economic Journal, Royal Economic Society, vol. 117(521), pages 357-385, 06. [Downloadable!] (restricted)
    Other versions:
  12. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June. [Downloadable!] (restricted)
    Other versions:
  13. Lorenzo Cappellari & Marco Leonardi, 2006. "Earnings Instability and Tenure," IZA Discussion Papers 2527, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  14. Abowd, John M & Card, David, 1989. "On the Covariance Structure of Earnings and Hours Changes," Econometrica, Econometric Society, vol. 57(2), pages 411-45, March. [Downloadable!] (restricted)
    Other versions:
  15. Lillard, Lee A & Weiss, Yoram, 1979. "Components of Variation in Panel Earnings Data: American Scientists, 1960-70," Econometrica, Econometric Society, vol. 47(2), pages 437-54, March. [Downloadable!] (restricted)
  16. Lawrence M. Kahn, 2007. "Employment Protection Reforms, Employment and the Incidence of Temporary Jobs in Europe: 1995-2001," IZA Discussion Papers 3241, Institute for the Study of Labor (IZA). [Downloadable!]
  17. María A.Davia & Virginia Hernanz, 2004. "Temporary employment and segmentation in the Spanish labour market: An empirical analysis through the study of wage differentials," Spanish Economic Review, Springer, vol. 6(4), pages 291-318, December. [Downloadable!] (restricted)
    Other versions:
  18. Ann Huff Stevens, 2001. "Changes in earnings instability and job loss," Industrial and Labor Relations Review, ILR Review, ILR School, Cornell University, vol. 55(1), pages 60-78, October.
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