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Temporary employment and wage gap with permanent jobs: evidence from quantile regression

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  • Bosio, Giulio

Abstract

Previous 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.

Suggested Citation

  • Bosio, Giulio, 2009. "Temporary employment and wage gap with permanent jobs: evidence from quantile regression," MPRA Paper 16055, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:16055
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    References listed on IDEAS

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    Cited by:

    1. Cristiano Perugini & Ekaterina Selezneva, 2015. "Labour market institutions, crisis and gender earnings gap in Eastern Europe," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 23(3), pages 517-564, July.
    2. Dias da Silva, António & Turrini, Alessandro, 2015. "Precarious and Less Well Paid? Wage Differences between Permanent and Fixed-term Contracts across the EU," IZA Policy Papers 105, Institute for the Study of Labor (IZA).
    3. Gail Pacheco & Bill Cochrane, 2015. "Decomposing the temporary-permanent wage gap in New Zealand," Working Papers 2015-07, Auckland University of Technology, Department of Economics.
    4. Gustavo A. García, 2017. "Labor Informality: Choice or Sign of Segmentation? A Quantile Regression Approach at the Regional Level for Colombia," Review of Development Economics, Wiley Blackwell, vol. 21(4), pages 985-1017, November.
    5. repec:eee:labeco:v:46:y:2017:i:c:p:26-46 is not listed on IDEAS
    6. Inga Lass & Mark Wooden, 2017. "The Structure of the Wage Gap for Temporary Workers: Evidence from Australian Panel Data," Melbourne Institute Working Paper Series wp2017n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    7. Nguyen, Huu-Chi. & Nguyen-Huu, Thanh Tam. & Le, Thi-Thuy-Linh., 2016. "Non-standard forms of employment in some Asian countries : a study of wages and working conditions of temporary workers," ILO Working Papers 994901213402676, International Labour Organization.
    8. Giulio Bosio, 2014. "The Implications of Temporary Jobs on the Distribution of Wages in Italy: An Unconditional IVQTE Approach," LABOUR, CEIS, vol. 28(1), pages 64-86, March.
    9. 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.
    10. Anna-Leena Asikainen & Giovanni Mangiarotti, 2017. "Open innovation and growth in IT sector," Service Business, Springer;Pan-Pacific Business Association, vol. 11(1), pages 45-68, March.
    11. Damiani, Mirella & Pompei, Fabrizio & Ricci, Andrea, 2014. "Enterprise-level bargaining and labour productivity of Italian family firms: a quantile regression analysis," MPRA Paper 60380, University Library of Munich, Germany.

    More about this item

    Keywords

    temporary employment; quantile regression; wage gap decomposition; endogenous selection;

    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

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