Employment protection, job-tenure and short term mobility wage gains - A new explanation for the Italian case

This paper investigates theoretical and empirical links between job tenure and short-term mobility wage gains. Standard theoretical approaches examining this subject 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 di??erent from US ones, especially for employment protection and turnover costs. Taking this feature into account we develop a theoretical model, evaluated through analytical and simulation procedures, where optimal switching conditions determine a positive correlation between job-tenure and short-term mobility wage gains. Our main proposition is confirmed for the Italian case using an administrative panel database (INPS) and different econometric specifications.