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The Structure of the Permanent Job Wage Premium: Evidence from Europe

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  • Kahn, Lawrence M.

    ()
    (Cornell University)

Abstract

Using longitudinal data on individuals from the European Community Household Panel (ECHP) for thirteen countries during 1995-2001, I investigate the wage premium for permanent jobs relative to temporary jobs. The countries are Austria, Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain, and the United Kingdom. I find that among men the wage premium for a permanent vs. temporary job is lower for older workers and native born workers; for women, the permanent job wage premium is lower for older workers and those with longer job tenure. Moreover, there is some evidence that among immigrant men, the permanent job premium is especially high for those who migrated from outside the European Union. These findings all suggest that the gain to promotion into permanent jobs is indeed higher for those with less experience in the domestic labor market. In contrast to the effects for the young and immigrants, the permanent job pay premium is slightly smaller on average for women than for men, even though on average women have less experience in the labor market than men do. It is possible that women even in permanent jobs are in segregated labor markets. But as noted, among women, the permanent job wage premium is higher for the young and those with less current tenure, suggesting that even in the female labor market, employers pay attention to experience differences.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7623.

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Length: 44 pages
Date of creation: Sep 2013
Date of revision:
Publication status: forthcoming in: Industrial Relations
Handle: RePEc:iza:izadps:dp7623

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Keywords: temporary jobs; segmented labor markets; wage structure;

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  1. Kahn, Lawrence M., 2009. "Temporary Jobs and Job Search Effort in Europe," IZA Discussion Papers 4020, Institute for the Study of Labor (IZA).
  2. Samuel Bentolila & Pierre Cahuc & Juan Jose Dolado & Thomas Le Barbanchon, 2010. "Two-Tier Labor Markets in the Great Recession: France vs. Spain," CESifo Working Paper Series 3269, CESifo Group Munich.
  3. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones or Dead Ends?," LABORatorio R. Revelli Working Papers Series 8, LABORatorio R. Revelli, Centre for Employment Studies.
  4. Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2004. "Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wages Distribution," IZA Discussion Papers 1373, Institute for the Study of Labor (IZA).
  5. Kahn, Lawrence M, 1998. "Collective Bargaining and the Interindustry Wage Structure: International Evidence," Economica, London School of Economics and Political Science, vol. 65(260), pages 507-34, November.
  6. Francine D. Blau & Lawrence Kahn, 2004. "Do Cognitive Test Scores Explain Higher U.S. Wage Inequality?," CESifo Working Paper Series 1139, CESifo Group Munich.
  7. Lawrence M. Kahn, 2007. "The Impact of Employment Protection Mandates on Demographic Temporary Employment Patterns: International Microeconomic Evidence," Economic Journal, Royal Economic Society, vol. 117(521), pages 333-356, 06.
  8. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, vol. 9(1), pages 63-91, February.
  9. Borjas, George J, 1985. "Assimilation, Changes in Cohort Quality, and the Earnings of Immigrants," Journal of Labor Economics, University of Chicago Press, vol. 3(4), pages 463-89, October.
  10. Darren Lubotsky, 2007. "Chutes or Ladders? A Longitudinal Analysis of Immigrant Earnings," Journal of Political Economy, University of Chicago Press, vol. 115(5), pages 820-867, October.
  11. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  12. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
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