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Temporary employment and wage gap with permanent jobs: evidence from quantile regression

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  • Bosio, Giulio

Abstract

Previous research on wage penalty for temporary workers has focused on the conditional mean model. This paper uses micro data from the 2006 wave of the Survey of Italian Households’ Income and Wealth (SHIW) to examine the wage gap between temporary and permanent workers across the whole wage distribution. I apply a quantile regression models to understand whether there are glass ceiling or sticky floor for fixed-term workers and to test the hypothesis of polarization of wage profile by contract status. I also exploit a counterfactual decomposition analysis to investigate whether the gap is attributed to differences in characteristics or to differences in coefficients effect. A possible source of misspecification may arise, the endogenous selection in temporary status. In order to address the selectivity bias, I adopt an IV specification and a variant of the traditional Heckman (1978) dummy endogenous variable for the quantile framework. The main finding is a sticky floor effect, in the sense that the wage penalty for temporary workers is wider at the bottom of earnings distribution and in particular the decomposition method shows how the coefficients effect is decreasing in the upper half of wage profile. The analysis by educational level and by sector confirms the sticky floor effect. Finally correcting for endogenous self-selection in temporary contract slightly modifies the magnitude of wage gap, without changing the main patterns evidenced in the standard quantile regression.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16055.

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Date of creation: Feb 2009
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Handle: RePEc:pra:mprapa:16055

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Keywords: temporary employment; quantile regression; wage gap decomposition; endogenous selection;

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Cited by:
  1. Tony Champion & Mike Coombes & Ian Gordon, 2013. "Urban Escalators and Inter-regional Elevators: The Difference that Location, Mobility and Sectoral Specialisation make to Occupational Progression," SERC Discussion Papers 0139, Spatial Economics Research Centre, LSE.
  2. Garcia Cruz, Gustavo Adolfo, 2014. "Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia," MPRA Paper 55224, University Library of Munich, Germany.
  3. Cristiano Perugini & Ekaterina Selezneva, 2013. "Labour Market Institutions, Crisis and Gender Earnings Gap in Eastern Europe," Working Papers 328, Institut für Ost- und Südosteuropaforschung (Institute for East and South-East European Studies).

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