2006), "Earnings Instability and Tenure

This paper develops a tractable empirical approach to estimate the effect of on-the-job tenure on the permanent and the transitory vari-ance of earnings in Italy. The model is also used to evaluate earnings in-stability associated with fixed-term contracts (short-tenure contracts). Our results indicate that each year of tenure on the job reduces earn-ings instability on average by 17%. Workers on a fixed-term contract can have an earnings instability up to 50 % higher than workers on a permanent contract