Estimating Causal Effects on the Entire Distribution of Wages. An application to italian temporary contracts during the economic crisis

Abstract

Our research question arise from an empirical problem regarding the introduction and spread of new, more flexible, contractual forms in the Italian labour market in the aftermath of the economic crisis. The aim of the work is the decomposition of changes in the distribution of wages using a semi-parametric methodology to estimate counterfactual densities in order to analyse the role of various explanatory factors (composition and discrimination effects). Using data from from Eurostat, the Italian cross-sectional EU-SILC surveys 2007 and 2013, results show that a wage penalty at the bottom of distribution of wages is most important explanations accounting for pay differences between temporary and permanent contracts while changes in the distribution of wages across time are due to the job-polarisation of the labour market in which low paid jobs are the most affected. Disclaimer: The responsibility for all conclusions drawn from the data lies entirely with the author