Temporary employment and wage gap with permanent jobs: evidence from quantile regression
AbstractPrevious 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.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 16055.
Date of creation: Feb 2009
Date of revision:
temporary employment; quantile regression; wage gap decomposition; endogenous selection;
Find related papers by JEL classification:
- J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J42 - Labor and Demographic Economics - - Particular Labor Markets - - - Monopsony; Segmented Labor Markets
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Melly, Blaise, 2005. "Decomposition of differences in distribution using quantile regression," Labour Economics, Elsevier, vol. 12(4), pages 577-590, August.
- van der Wiel, Karen, 2009.
"Better Protected, Better Paid: Evidence on How Employment Protection Affects Wages,"
IZA Discussion Papers
4465, Institute for the Study of Labor (IZA).
- van der Wiel, Karen, 2010. "Better protected, better paid: Evidence on how employment protection affects wages," Labour Economics, Elsevier, vol. 17(1), pages 16-26, January.
- van der Wiel, Karen, 2008. "Better Protected, Better Paid: Evidence on How Employment Protection Affects Wages," IZA Discussion Papers 3352, Institute for the Study of Labor (IZA).
- 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.
- Joao Pedro Azevedo, 2004. "GRQREG: Stata module to graph the coefficients of a quantile regression," Statistical Software Components S437001, Boston College Department of Economics, revised 17 Mar 2011.
- Omar Arias & Kevin F. Hallock & Walter Sosa Escudero, 1999.
"Individual Heterogeneity in the Returns to Schooling: Instrumental Variables Quantile Regression using Twins Data,"
Department of Economics, Working Papers
016, Departamento de Economía, Facultad de Ciencias Económicas, Universidad Nacional de La Plata.
- Omar Arias & Walter Sosa-Escudero & Kevin F. Hallock, 2001. "Individual heterogeneity in the returns to schooling: instrumental variables quantile regression using twins data," Empirical Economics, Springer, vol. 26(1), pages 7-40.
- Matteo, PICCHIO, 2006.
"Wage Differentials and Temporary Jobs in Italy,"
Discussion Papers (ECON - DÃ©partement des Sciences Economiques)
2006033, Université catholique de Louvain, Département des Sciences Economiques.
- Markus Frolich & Blaise Melly, 2010. "Estimation of quantile treatment effects with Stata," Stata Journal, StataCorp LP, vol. 10(3), pages 423-457, September.
- Wiji Arulampalam & Alison Booth & Mark L. Bryan, 2006.
"Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wages Distribution,"
CEPR Discussion Papers
510, Centre for Economic Policy Research, Research School of Economics, Australian National University.
- Wiji Arulampalam & Alison L. Booth & Mark L. Bryan, 2007. "Is There a Glass Ceiling over Europe? Exploring the Gender Pay Gap across the Wage Distribution," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 60(2), pages 163-186, January.
- Arulampalam, Wiji & Booth, Alison L. & Bryan, Mark L., 2005. "Is there a glass ceiling over Europe? Exploring the gender pay gap across the wages distribution," ISER Working Paper Series 2005-25, Institute for Social and Economic Research.
- 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).
- Frölich, Markus & Melly, Blaise, 2008.
"Unconditional Quantile Treatment Effects under Endogeneity,"
IZA Discussion Papers
3288, Institute for the Study of Labor (IZA).
- Markus FrÃ¶lich & Blaise Melly, 2013. "Unconditional Quantile Treatment Effects Under Endogeneity," Journal of Business & Economic Statistics, American Statistical Association, vol. 31(3), pages 346-357, July.
- Markus Frölich & Blaise Melly, 2007. "Unconditional quantile treatment effects under endogeneity," CeMMAP working papers CWP32/07, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
- José Mata & José A. F. Machado, 2005. "Counterfactual decomposition of changes in wage distributions using quantile regression," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(4), pages 445-465.
- Sarah Brown & John G. Sessions, 2005. "Employee Attitudes, Earnings and Fixed-Term Contracts: International Evidence," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 141(2), pages 296-317, July.
- Amuedo-Dorantes, Catalina & Serrano-Padial, Ricardo, 2007.
"Wage Growth Implications of Fixed-Term Employment: An Analysis by Contract Duration and Job Mobility,"
Elsevier, vol. 14(5), pages 829-847, October.
- Catalina Amuedo-Dorantes & Ricardo Serrano-Padial, 2006. "Wage Growth Implications of Fixed-Term Employment: An Analysis by Contract Duration and Job Mobility," Working Papers 0016, San Diego State University, Department of Economics.
- Felgueroso, Florentino & De la Rica Goiricelaya, Sara, 1999. "Wage differentials between Permanent and Temporal Contracts: Further Evidence," DFAEII Working Papers 2002-07, University of the Basque Country - Department of Foundations of Economic Analysis II.
- Blaise Melly, 2005. "Public-private sector wage differentials in Germany: Evidence from quantile regression," Empirical Economics, Springer, vol. 30(2), pages 505-520, 09.
- Matteo PICCHIO, 2006.
"Wage Differentials between Temporary and Permanent Workers in Italy,"
257, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
- Picchio, M., 2006. "Wage differentials between temporary and permanent workers in Italy," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5573982, Tilburg University.
- Jaume Garcia & Pedro J. Hernández & Ángel López Nicolás, 1998.
"How wide is the gap? An investigation of gender wage differences using quantile regression,"
Economics Working Papers
287, Department of Economics and Business, Universitat Pompeu Fabra.
- Angel López-Nicolás & Jaume García & Pedro J. Hernández, 2001. "How wide is the gap? An investigation of gender wage differences using quantile regression," Empirical Economics, Springer, vol. 26(1), pages 149-167.
- Heinze, Anja & Beninger, Denis & Beblo, Miriam & Laisney, François, 2003. "Measuring Selectivity-Corrected Gender Wage Gaps in the EU," ZEW Discussion Papers 03-74, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Fabio Berton, 2008. "The (long) run out of unemployment: are temporary jobs the shortest way?," LABORatorio R. Revelli Working Papers Series 76, LABORatorio R. Revelli, Centre for Employment Studies.
- Paolo Naticchioni & Andrea Ricci & Emiliano Rustichelli, 2008. "Wage Inequality, Employment Structure and Skill-biased Change in Italy," LABOUR, CEIS, vol. 22(s1), pages 27-51, 06.
- Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2002.
"Labour as a buffer: do temporary workers suffer?,"
ISER Working Paper Series
2002-29, Institute for Social and Economic Research.
- 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.
- 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.
- 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).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.