Wage Differentials between Temporary and Permanent Workers in Italy

Matteo Picchio

No 257, Working Papers from Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali

Abstract: The focus of this paper is to estimate the wage differentials between temporary and permanent workers using the 2002 wave of the Survey of Italian Households' Income and Wealth (SHIW) carried out by the Bank of Italy. A standard Mincer equation extended to a dummy variable for fied term contracts, interaction terms, and further explanatory variables will be estimated. Two hypothetical sources of misspecification may arise. Firstly, the potential endogeneity of the dummy variable for the contract type. Indeed, it seems plausible that those who end up in temporary jobs are not a random draw from the population and that this selection generates biased estimates. We will propose two methods to overcome the self-selectivity bias: the first one is an instrumental variables approach, the second one consists in the Heckman's (1978) dummy endogenous variable model estimator. The second possible source of misspecification is the "classical" Heckman's (1979) sample selection bias. We will present a procedure in order to test the presence of such a sample selection bias taking into account the endogeneity of the dummy variable for the contract type.

Keywords: dummy endogenous variable; sample selection bias; single equation GMM; temporary employment; wage differentials (search for similar items in EconPapers)
JEL-codes: C20 C30 J31 M51 (search for similar items in EconPapers)
Pages: 35
Date: 2006-04
New Economics Papers: this item is included in nep-lab
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (27)

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