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Earnings instability and tenure

  • Cappellari, Lorenzo
  • Leonardi, Marco

This paper develops a tractable empirical approach to estimate the effect of on-the-job tenure on the permanent and transitory variance of earnings. The model is also used to evaluate the earnings instability associated with fixed-term contract (short-tenure contracts) in Italy. Our results indicate that each year of tenure on the job reduces earnings instability on average by 15%. Workers on a fixed-term contract on average have an earnings instability 10% higher than workers on a permanent contract. Workers who spend their entire working life on fixed-term contracts can expect an earnings instability twice as high.

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File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/iser/2007-04.pdf
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Paper provided by Institute for Social and Economic Research in its series ISER Working Paper Series with number 2007-04.

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Date of creation: 15 Feb 2007
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Publication status: published
Handle: RePEc:ese:iserwp:2007-04
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