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Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector

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  • Mosca, Michele

    () (University of Naples Federico II)

  • Pastore, Francesco

    () (Università della Campania Luigi Vanvitelli)

Abstract

This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across organisations at a sector level focusing on the role of hiring and job search methods, including informal networks. We find that, independent of the organisation type, being hired through public competitions brings with it a substantial wage premium (ranging from 7 to 32%). Informal networks bring with them a wage penalty (-6.5%) in the state sector, where formal hiring methods are common, and a wage premium (6.3%) in social cooperatives and religious institutions, where formal hiring methods are not common. Interestingly, the differences in hiring and in job search methods between state and private organisations explain from 50% to 100% of the conditional wage differentials across organisation types. Our interpretation of these findings is that nonprofit organisations prefer informal recruitment methods not for nepotistic reasons, but to better select the most motivated workers, those who share the nonprofit mission. This paper adds to the previous literature by suggesting that in addition to lower than average monetary compensations, informal recruitment methods are part of the process of self-selection of motivated workers in nonprofit organisations.

Suggested Citation

  • Mosca, Michele & Pastore, Francesco, 2008. "Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector," IZA Discussion Papers 3422, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp3422
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    Cited by:

    1. Valentina Meliciani & Debora Radicchia, 2014. "Informal Network, Spatial Mobility and Overeducation in the Italian Labour Market," Working Papers 19, Birkbeck Centre for Innovation Management Research, revised Nov 2014.
    2. Valentina Meliciani & Debora Radicchia, 2016. "Informal networks, spatial mobility and overeducation in the Italian labour market," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 56(2), pages 513-535, March.
    3. Oyer, Paul & Schaefer, Scott, 2011. "Personnel Economics: Hiring and Incentives," Handbook of Labor Economics, Elsevier.
    4. Bilyk Olga & Sheron Iuliia, 2012. "Do informal networks matter in the Ukrainian labor market?," EERC Working Paper Series 12/11e, EERC Research Network, Russia and CIS.

    More about this item

    Keywords

    social services; Italy; earnings functions; informal networks; nonprofit organisations;

    JEL classification:

    • I11 - Health, Education, and Welfare - - Health - - - Analysis of Health Care Markets
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L84 - Industrial Organization - - Industry Studies: Services - - - Personal, Professional, and Business Services

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