Job-to-Job Flows and Wage Prospects in Italy

This paper examines the association between job-to-job flows and wages in the Italian labour market, using the AD-SILC database built by merging information from the Italian waves of the EU statistics on income and living conditions (IT-SILC) with longitudinal administrative records on earnings. We estimate the relationship between transitions from one firm to another and wages, using a static specification and local projections (LPs) to analyze how much this relationship evolves over the working career. After controlling for a large set of individual characteristics to mitigate endogeneity, we find a positive and significant relationship between wages and job-to-job flows. We also find that the positive association begins early in workers’careers and then dynamically deploys over time to be reabsorbed in the latest phases of the career. We find that low labor market experience may be a relevant reading key to discuss this evidence. This result is consistent with the idea that, at the early phases of workers’careers, job-to-job flows enable individuals to gain additional skills and specialize, shaping their job profile and enhancing the employer-employee match. As experience increases, additional job-to-job transitions do not imply further wage gains