Earnings Instability and Tenure

Lorenzo Cappellari and Marco Leonardi

No 2527, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: This paper develops a tractable empirical approach to estimate the effect of on-the-job tenure on the permanent and the transitory variance of earnings. The model is also used to evaluate earnings instability associated with fixed-term contracts (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.

Keywords: temporary contracts; tenure; earnings dynamics; earnings instability; minimum distance estimation (search for similar items in EconPapers)
JEL-codes: C23 J21 J31 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2006-12
New Economics Papers: this item is included in nep-eec and nep-lab
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Citations: View citations in EconPapers (3)

Published - revised version published in: Scandinavian Journal of Economics , 2016, 118 (2), 202 - 234

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https://docs.iza.org/dp2527.pdf (application/pdf)

Related works:
Journal Article: Earnings Instability and Tenure (2016)
Working Paper: Earnings Instability and Tenure (2013)
Working Paper: Earnings Instability and Tenure (2007)
Working Paper: Earnings instability and tenure (2007)
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