Employment protection, job-tenure and short term mobility wage gains: An application to the Italian case

PANIGO, DEMIAN TUPAC; NATICCHIONI, PAOLO

Madrid

Congreso; 19th Annual Congress of European Economic Association; 2004

EEA

The main goal of this paper is to analyze theoretical and empirical links between job-tenure and short-term mobility wage gains. Standard theoretical approaches examining this subject (search theory, job-matching and on-the-job training models) 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 from US ones, especially for employment protection and turnover costs. Taking this feature into account we develop a simplified model, evaluated through analytical and simulation procedures, where optimal switching condition determines a positive correlation between job-tenure and short-term mobility wage gains. The main proposition derived from our model is confirmed for the Italian case. Using a panel database and different econometric specifications we find out that short-term mobility wage gains are non linear and positively correlated with job-tenure