Earnings Instability and Tenure

We study the effect of tenure on earnings instability in Italy using the reforms of temporary employment contracts, which affected the average tenure of workers differentially across cohorts. We develop a model of earnings dynamics, and we exploit the variation of tenure and instability over time an...

Full description

Saved in:

Bibliographic Details
Published in:	The Scandinavian journal of economics 2016-04, Vol.118 (2), p.202-234
Main Authors:	Cappellari, Lorenzo, Leonardi, Marco
Format:	Article
Language:	eng
Subjects:	Earnings Earnings dynamics Economic reform Economic theory J21 J31 Labor contracts Labor economics labor reforms Labour contract Labour economics permanent and transitory variance Studies temporary contracts Tenure Wages & salaries
Online Access:	Get full text
Tags:	Add Tag No Tags, Be the first to tag this record!

Description
Summary:	We study the effect of tenure on earnings instability in Italy using the reforms of temporary employment contracts, which affected the average tenure of workers differentially across cohorts. We develop a model of earnings dynamics, and we exploit the variation of tenure and instability over time and across birth cohorts to estimate policy-relevant parameters. Our results indicate that each year of tenure on the job reduces earnings instability by 11 percent; the drop is faster in the first three years of the match. Workers on a temporary contract have an earnings instability up to 100 percent higher than workers on a permanent contract.
ISSN:	0347-0520 1467-9442