Do Wages Compensate for Anticipated Working Time Restrictions? Evidence from Seasonal Employment in Austria

Abstract

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may ABSTRACTThis paper investigates the existence of compensating wage differentials across seasonal and non seasonal jobs which arise due to anticipated working time restrictions. We build on a theoretical model by Abowd and Ashenfelter (1981), which links the compensating wage differential to variation in individual unemployment through the effect of the unemployment insurance and the compensated labor supply elasticity. We use longitudinal information from the Austrian administrative records to derive a definition of seasonality based on observed regularities in employment patterns. As wages change across seasonal and long term jobs for the same individual over time, we relate those changes to variations in unemployment and control for individual specific effects. In order to resolve the potential endogeneity of unemployment with respect to wages we use variation in the starting month of the job as an exogenous predictor of anticipated working time restrictions. We find that employers pay on average a positive wage differential of about 11\% for seasonal jobs and that the unemployment insurance system contributes a similar amount.4 NON-TECHNICAL SUMMARYA substantial body of research in labor economics examines the existence of compensating wage differentials. These arise when apparently identical workers earn different wage rates across sectors, employers and even within the same firms. According to the competitive view, these differentials are due to the existence of positive or negative attributes of the job, which are "offered" by the employer to their workers and whose price is reflected in the wage rate.Numerous studies have explored compensating wage differentials arising from characteristics of the job such as employer-based pension schemes or flexible working hours. In this paper we examine the existence of compensating wage differentials due to expected or anticipated wage losses, which may occur because of employer-determined working time restrictions.Previous attempts to quantify the effect of working time restrictions on wages rely on a worker's industry affiliation or his self-reported contract, and are often based on crosssectional data. This makes it difficult to distinguish industry and individual effects from the true effect of the working time constraints.In contrast with this approach, we derive a more flexible definition of working time constraints. Specifically, we use the longitudinal informati...

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