More insecure and less paid? The effect of perceived job insecurity on wage distribution

This article employs a Counterfactual Decomposition Analysis (CDA) using both a semi-parametric and a non-parametric method to examine the pay gap due to perceived job insecurity over the entire wage distribution of dependent workforce in Italy. Using the 2015 INAPP Survey on Quality of Work, our results exhibit a mirror J-shaped pattern in the pay gap between secure and insecure workers, with a significant sticky floor effect, i.e. a greater effect of job insecurity at the lowest quantiles. This pattern is mainly due to the characteristics effect, while the relative incidence of the coefficient component accounts roughly for 22% up to 36% of the total difference, being more relevant at the bottom of the wage distribution.