IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Flexibility, Labour contracts and Wage Differentials

  • Rossetti Stefania
  • Tanda Paola

The paper shows evidence about the effect of labour contracts flexibility on wage differential between fixed term and permanent contracts in Italy. We use data from the Eurostat "European Community Households Panel" (ECHP) for 1995-2001. The time span considered represents both the situation before and that after the labour market reform aimed at promoting the diffusion of more flexible contractual arrangements (law n. 196/1997, known as "Pacchetto Treu"). We find that workers employed under fixed term contracts earn lower wages than their permanent contracts counterparts. This is not due to different characteristics of the two groups of workers as the wage differential persists even after controlling for observable and unobservable workers characteristics. However, the wage differential decreases considerably over time as labour market flexibility spreads. We argue that the results are consistent with the hypothesis that permanent workers are insiders in the labour market and that the wage differential reflects their bargaining power. As more competition is injected in the market thanks to the more flexible contractual forms the market power of the insiders shrinks closing the wage gap.

If 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.

File URL: http://www.rivisteweb.it/download/article/10.1429/24287
Download Restriction: no

File URL: http://www.rivisteweb.it/doi/10.1429/24287
Download Restriction: no

Article provided by Società editrice il Mulino in its journal Politica economica.

Volume (Year): (2007)
Issue (Month): 1 ()
Pages: 65-82

as
in new window

Handle: RePEc:mul:je8794:doi:10.1429/24287:y:2007:i:1:p:65-82
Contact details of provider:

No references listed on IDEAS
You can help add them by filling out this form.

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:mul:je8794:doi:10.1429/24287:y:2007:i:1:p:65-82. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.