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Do wages compensate for anticipated working time restrictions? Evidence from seasonal employment in Austria

  • Del Bono, Emilia
  • Weber, Andrea

In this paper we investigate the existence of compensating wage differentials across seasonal and non seasonal jobs, which arise due to anticipated working time restrictions. We build on a theoretical model by Abowd and Ashenfelter (1981), which links the compensating wage differential to variation in individual unemployment through the effect of the unemployment insurance and the compensated labor supply elasticity. Since the Austrian labor market is characterized by an unusually high share of seasonal employment, our data provides the ideal setting in which to empirically test this model. We use the very rich information contained in the Austrian administrative records to derive a flexible definition of seasonal employment based on observed regularities in employment patterns. We find that employers pay on average a positive wage differential of about 11% for seasonal jobs and that the unemployment insurance system contributes a similar amount.

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Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2006-37.

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Date of creation: 01 Jul 2006
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Publication status: published
Handle: RePEc:ese:iserwp:2006-37
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  1. Stiglbauer, Alfred M. & Stahl, Florian & Winter-Ebmer, Rudolf & Zweimüller, Josef, 2002. "Job Creation and Job Destruction in a Regulated Labor Market: The Case of Austria," IZA Discussion Papers 546, Institute for the Study of Labor (IZA).
  2. John M. Abowd & Orley C. Ashenfelter, 1980. "Anticipated Unemployment, Temporary Layoffs and Compensating Wage Differentials," Working Papers 517, Princeton University, Department of Economics, Industrial Relations Section..
  3. Hofer, Helmut & Pichelmann, Karl & Schuh, Andreas-Ulrich, 1998. "Price and Quantity Adjustments in the Austrian Labour Markets," Economics Series 57, Institute for Advanced Studies.
  4. Whitney K. Newey & James L. Powell & Francis Vella, 1999. "Nonparametric Estimation of Triangular Simultaneous Equations Models," Econometrica, Econometric Society, vol. 67(3), pages 565-604, May.
  5. Rafael Lalive, . "Did we Overestimat the Value of Health?," IEW - Working Papers 060, Institute for Empirical Research in Economics - University of Zurich.
  6. Garen, John, 1988. "Compensating Wage Differentials and the Endogeneity of Job Riskiness," The Review of Economics and Statistics, MIT Press, vol. 70(1), pages 9-16, February.
  7. Richard Blundell & James Powell, 2001. "Endogeneity in nonparametric and semiparametric regression models," CeMMAP working papers CWP09/01, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
  8. Hamermesh, Daniel S & Wolfe, John R, 1990. "Compensating Wage Differentials and the Duration of Wage Loss," Journal of Labor Economics, University of Chicago Press, vol. 8(1), pages S175-97, January.
  9. Assaad, Ragui & Tunali, Insan, 2002. "Wage formation and recurrent unemployment," Labour Economics, Elsevier, vol. 9(1), pages 17-61, February.
  10. Moretti, Enrico, 2000. "Do Wages Compensate for Risk of Unemployment? Parametric and Semiparametric Evidence from Seasonal Jobs," Journal of Risk and Uncertainty, Springer, vol. 20(1), pages 45-66, January.
  11. Topel, Robert H, 1984. "Equilibrium Earnings, Turnover, and Unemployment: New Evidence," Journal of Labor Economics, University of Chicago Press, vol. 2(4), pages 500-522, October.
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