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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. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(480), pages F189-F213, June.
  2. Jacob A. Mincer, 1974. "Schooling, Experience, and Earnings," NBER Books, National Bureau of Economic Research, Inc, National Bureau of Economic Research, Inc, number minc74-1.
  3. James J. Heckman, 1977. "Dummy Endogenous Variables in a Simultaneous Equation System," NBER Working Papers 0177, National Bureau of Economic Research, Inc.
  4. 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, Springer, vol. 6(4), pages 291-318, December.
  5. María Guadalupe, 2002. "The Hidden Costs of Fixed Term Contracts: the Impact On Work Accidents," CEP Discussion Papers, Centre for Economic Performance, LSE dp0551, Centre for Economic Performance, LSE.
  6. Riccardo LUCCHETTI & Stefano STAFFOLANI & Alessandro STERLACCHINI, 2003. "Computer, Wages and Working Hours in Italy," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 182, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  7. 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, Royal Economic Society, vol. 112(721), pages F270-F295, June.
  8. 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, MIT Press, vol. 106(4), pages 1373-83, November.
  9. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, Elsevier, vol. 9(1), pages 63-91, February.
  10. Luca Nunziata & Stefano Staffolani, 2001. "On Short-Term Contracts Regulations," Economics Series Working Papers, University of Oxford, Department of Economics 2001-W07, University of Oxford, Department of Economics.
  11. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 17(4), pages S142-69, October.
  12. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 17(3), pages 475-494, September.
  13. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  14. Douglas Staiger & James H. Stock, 1997. "Instrumental Variables Regression with Weak Instruments," Econometrica, Econometric Society, Econometric Society, vol. 65(3), pages 557-586, May.
  15. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521331494.
  16. 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.
  17. Jacob A. Mincer, 1974. "Introduction to "Schooling, Experience, and Earnings"," NBER Chapters, National Bureau of Economic Research, Inc, in: Schooling, Experience, and Earnings, pages 1-4 National Bureau of Economic Research, Inc.
  18. Gourieroux,Christian, 2000. "Econometrics of Qualitative Dependent Variables," Cambridge Books, Cambridge University Press, Cambridge University Press, number 9780521589857.
  19. 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.
  20. Sarah Brown & John G. Sessions, . "Education, Earnings, and Fixed-Term Contracts," Discussion Papers in Public Sector Economics, Department of Economics, University of Leicester 01/5, Department of Economics, University of Leicester.
  21. 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.
  22. 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, Tinbergen Institute 01-086/3, Tinbergen Institute.
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Cited by:
  1. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. Domenico Tabasso, 2009. "Temporary Contracts and Monopsony Power in the UK Labour Market," Economics Discussion Papers, University of Essex, Department of Economics 675, University of Essex, Department of Economics.
  3. Bosio, Giulio, 2009. "Temporary employment and wage gap with permanent jobs: evidence from quantile regression," MPRA Paper 16055, University Library of Munich, Germany.
  4. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. Noe', Chiara, 2009. "Subject of degree and the gender wage gap: Evidence from Italy," MPRA Paper 47289, University Library of Munich, Germany.
  6. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  7. Carmen Aina & Fernanda Mazzotta & Lavinia Parisi, 2010. "Do Flexible Employment Contracts Change Household Income Differences in Italy?," Working Papers, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont 129, SEMEQ Department - Faculty of Economics - University of Eastern Piedmont.

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