Abstract: We study how firm heterogeneity interacts with the choice between permanent and temporary employment and different regulatory interventions. First, we document a remarkable degree of variability in the share of temporary employees in the workforce, both across firms and over time. We then show that this variability is associated with the response of firms to a reform that changed the regulation of temporary employment in Italy: firms that only partially relied on temporary jobs reacted by substituting between contract types, switching from temporary positions to permanent ones; firms with a higher share of temporary employees, instead, ended up destroying jobs with much higher frequency. We turn to a search and matching model of the labor market with endogenous contract choice to rationalize these facts. In the model, firms hire workers using either a permanent or a temporary contract, based on their productivity and the expected duration of the production opportunity related to each job. Through the lens of the model we: (i) explain the empirical facts in a consistent framework; (ii) consider counterfactual scenarios, assessing the effects of regulation under different economic conditions.

Conferences/Seminars:  OECD (2023); Banque de France (2023); EALE Conference (2022); AIEL-Genoa Spring Workshop on Labour Market Institutions (2022); 14th PhD Workshop in Economics at Collegio Carlo Alberto (2021);  Applied Economics Conference: Labour, Health, Education and Welfare (2021); Sciences Po Friday Lunch Seminar (2021)

• [Insee WP, forthcoming] [Twitter Thread]

• Media coverage: Pour l'Éco (in French)

Abstract: We use a newly built and exhaustive matched employer-employee database to study the contribution of firms to the dynamics of wage inequalities in France, where the original Abowd, Kramarz and Margolis (1999) double fixed effects model of log-wages was originally estimated on sampled data. Contrary to other countries, overall wage inequalities decreased in the 2002-2016 period. But France is not entirely an exception: the same polarizing dynamics observed in other countries are operating through an increase in between-firm inequalities. By applying the AKM model of log-wages with workers and firms additive fixed effects, we document increased sorting of high-wage workers to high-wage firms. We correct for bias in estimates of variance and covariance by clustering firms, and by splitting the sample as a simplification of previous methods. The rise in sorting is robust to these correction strategies and linked entirely to firm demographics and worker composition changes over time across firms. Over the same period, bottom earnings percentiles increased more than the rest of the distribution, in line with the rise in the legal minimum wage. As a result, within-firm inequalities decreased, more than offsetting the rising between-firm inequalities.

Conferences/Seminars:  COIN Meeting in Oslo (2022)

[CEPR Discussion Paper]  [VoxEU Column]

Abstract: We revisit evidence on the contribution of firms to the gender wage gap using a cluster-based approach to investigate time series and life-cycle patterns as well as match effects by gender. This also relaxes usual sample restrictions, resulting in larger estimates of the contribution of firms, driven by a higher within-firm component. Further, despite a decline in the unconditional gender wage gap between 1995 and 2015, the gap in firm pay premiums and its decomposition remained constant. It increases with age, exclusively driven by the between-firm component. Finally we find limited evidence of complementarities for both men and women.

Conferences/Seminars:  PhD Seminar, Sciences Po  (2020); Insead Brown Bag Seminar (2020)

• Access to Italian Social Security data through VisitINPS Scholars Program

Relying on a rich employer-employee dataset covering the universe of Italian dependent employment, we study the effect of a recent reform of temporary jobs legislation on worker individual outcomes and on reallocation patterns across firms, professions and sectors.