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Wage differentials between temporary and permanent workers in Italy

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  • Picchio, M.

    (Tilburg University)

Abstract

The focus of this paper is to estimate the wage differentials between temporary and permanent workers using the 2002 wave of the Survey of Italian Households' Income and Wealth (SHIW) carried out by the Bank of Italy. A standard Mincer equation extended to a dummy variable for fied term contracts, interaction terms, and further explanatory variables will be estimated. Two hypothetical sources of misspecification may arise. Firstly, the potential endogeneity of the dummy variable for the contract type. Indeed, it seems plausible that those who end up in temporary jobs are not a random draw from the population and that this selection generates biased estimates. We will propose two methods to overcome the self-selectivity bias: the first one is an instrumental variables approach, the second one consists in the Heckman's (1978) dummy endogenous variable model estimator. The second possible source of misspecification is the "classical" Heckman's (1979) sample selection bias. We will present a procedure in order to test the presence of such a sample selection bias taking into account the endogeneity of the dummy variable for the contract type.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-5573982.

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Date of creation: 2006
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Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-5573982

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Web page: http://www.tilburguniversity.edu/

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  1. Riccardo LUCCHETTI & Stefano STAFFOLANI & Alessandro STERLACCHINI, 2003. "Computer, Wages and Working Hours in Italy," Working Papers 182, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. Luca Nunziata & Stefano Staffolani, 2001. "On Short-Term Contracts Regulations," Economics Papers 2001-W7, Economics Group, Nuffield College, University of Oxford.
  3. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
  4. Guadalupe, Maria, 2003. "The hidden costs of fixed term contracts: the impact on work accidents," Labour Economics, Elsevier, vol. 10(3), pages 339-357, June.
  5. Cahuc, Pierre & Postel-Vinay, Fabien, 2001. "Temporary Jobs, Employment Protection and Labor Market Performance," IZA Discussion Papers 260, Institute for the Study of Labor (IZA).
  6. 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.
  7. Rebitzer, James B & Taylor, Lowell J, 1991. "A Model of Dual Labor Markets When Product Demand Is Uncertain," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1373-83, November.
  8. Sarah Brown & John G. Sessions, . "Education, Earnings, and Fixed-Term Contracts," Discussion Papers in Public Sector Economics 01/5, Department of Economics, University of Leicester.
  9. Douglas Staiger & James H. Stock, 1994. "Instrumental Variables Regression with Weak Instruments," NBER Technical Working Papers 0151, National Bureau of Economic Research, Inc.
  10. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 475-494, September.
  11. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  12. Eng Loh, 1994. "Employment probation as a sorting mechanism," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 47(3), pages 471-486, April.
  13. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521589857, April.
  14. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, number minc74-1, June.
  15. 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.
  16. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
  17. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, number 9780521331494, April.
  18. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  19. McGinnity, Frances & Mertens, Antje, 2002. "Fixed-term contracts in East and West Germany: Low wages, poor prospects?," SFB 373 Discussion Papers 2002,72, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  20. 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.
  21. Siv Gustafsson & Eiko Kenjoh & Cecile Wetzels, 2001. "Employment Choices and Pay Differences between Non-Standard and Standard Work in Britain, Germany, Netherlands and Sweden," Tinbergen Institute Discussion Papers 01-086/3, Tinbergen Institute.
  22. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October.
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Cited by:
  1. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. Noe', Chiara, 2009. "Subject of degree and the gender wage gap: Evidence from Italy," MPRA Paper 47289, University Library of Munich, Germany.
  3. Domenico Tabasso, 2009. "Temporary Contracts and Monopsony Power in the UK Labour Market," Economics Discussion Papers 675, University of Essex, Department of Economics.
  4. Carmen Aina & Fernanda Mazzotta & Lavinia Parisi, 2010. "Do Flexible Employment Contracts Change Household Income Differences in Italy?," Working Papers 129, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.
  5. Bosio, Giulio, 2009. "Temporary employment and wage gap with permanent jobs: evidence from quantile regression," MPRA Paper 16055, University Library of Munich, Germany.
  6. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  7. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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