Employment protection, Job-Tenure Effects and Short-Term Mobility Wage Gains: A new explanation for the Italian Case

NATICCHIONI, PAOLO; PANIGO, DEMIAN TUPAC

Discussion Papers Of The Research Program On Labour Market Dynamics

Universitá "La Sapienza" di Roma

Lugar: Roma; Año: 2004 vol. 4 p. 1 - 23

This paper investigates theoretical and empirical links between job-tenure and short-term mobility wage gains. Standard theoretical approaches examining this subject predict a negative correlation between these variables. Furthermore, this result has been confirmed in different applied researches for US. However, European labour market institutions appear to be quite different form US ones, especially for employment protection and turnover costs. Taking this feature into account we develop a theoretical model, evaluated through analytical and simulation procedures, where optimal switching conditions determine a positive correlation between job-tenure an short-term mobility wage gains. Our main proposition is confirmed for the Italian case using an administrative panel database (INPS) and different econometric specifications.