Abstract
This essay analyzes the role of different recruitment channels, and of informal networks in particular, on wage structures across various organization types in the Italian social service sector. While the impact of recruitment methods on wages has been addressed in several previous contributions, none of them focuses on social services. Comparison of outcomes across organization types within the same sector is in itself another novelty, as compared to previous studies that generally focus on differences across sectors or, more recently, across countries. The main findings are that nonprofit organizations prefer informal recruitment methods to better select the most motivated workers, namely those workers who share the nonprofit mission. Furthermore the impact of informal contacts on the wage structure explains much of the unobserved wage differentials across organization type.
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- 1.
In fact, the early literature on informal networks has focused on professional (“old boys”), rather than family networks (see, for instance, Saloner 1985; Simon and Warner 1992). Some recent empirical literature distinguishes the relative impact of these two types of networks, finding a positive wage effect in the former case and a negative one in the latter case (Sylos Labini 2004a; Antoninis 2006; Datcher Loury 2006).
- 2.
For the sake of brevity, the following discussion focuses on wage effects. See Ioannides and Datcher Loury (2004) for a more comprehensive review of the literature on employment effects.
- 3.
Table 7.11 (in the Appendix) reports in some detail various features of these studies.
- 4.
When treating independent dummy variables, such as being a woman, the semi-elasticity interpretation is flawed and (Halvorsen and Palmquist 1980) propose the following formula: (eβ−1)*100. It measures the percentage change in the median wage, which is less influenced by outliers. It is possible to interpret the estimated coefficient of dummy variables directly as semi-elasticity if the estimated coefficient is close to zero.
- 5.
From North to South: Trento, Gorizia, Pordenone, Trieste, Udine, Venezia, Cuneo, Torino, Brescia, Firenze, Napoli, Salerno, Catanzaro, Reggio Calabria and Messina.
- 6.
Interviewees were asked: “Could you please indicate the average net monthly wage you received in recent months (exclusive of extra-work pay, wage arrears and so on)?”
- 7.
A small number of sampled individuals (9.5%) did not declare either their monthly wage (6.8%) or their contractual hours (4.1%). As an experiment, missing observations have been replaced by mean values of the variable distinguished by organisation type. The pre and post transformation average wages differ only by less than 1%. However, results based on estimates of the same equations on the original and on the transformed dependent variable show that the results are not robust to the change in the dependent variable. As a consequence, the transformed wages are discarded.
- 8.
The statutory years for the traditional university degree vary from 4 (in general) to 5 years (for Engineering and Medical sciences). Nonetheless, the average actual years of attendance necessary to gain a university degree is over 7–8 years depending on the type of degree. This implies that the estimated returns to a year of education overestimate the true returns. A reform implemented in the second half of the 1990s has brought in a new type of University degree that can be gained in three years. This second type of degree is here called the bachelor’s degree.
- 9.
We experimented with variables for the effect of the higher cost of living in big cities. However, these variables turned out to be statistically insignificant and were excluded from the estimates.
- 10.
These respondents qualified themselves as social workers, but were not legally qualified social workers.
- 11.
Considering the low coefficients, the (Halvorsen and Palmquist 1980) correction of coefficients of dummy variables will be ignored. In fact, in this case, the values are roughly the same.
- 12.
Even if data are difficult to compare due to the different number of options given to respondents, the share of workers using informal networks as their preferred job search methods is in the social service sector lower than the country’s average. Using SHIW data, (Pistaferri 1999) finds a share of about 47% in 1991 and 38% in 1993. Using the European Community Household Panel, (Pellizzari 2004) finds an average share of individuals in the sample using informal networks of 25.5% in 1996.
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Acknowledgments
A previous, longer, version of this Chapter has been published as IZA discussion paper n. 3422. We thank Sergio Destefanis and Valentina Meliciani for useful suggestions on former drafts. However, the responsibility of any errors remains only ours.
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Mosca, M., Pastore, F. (2009). Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector. In: Musella, M., Destefanis, S. (eds) Paid and Unpaid Labour in the Social Economy. AIEL Series in Labour Economics. Physica, Heidelberg. https://doi.org/10.1007/978-3-7908-2137-6_8
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