Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector

51 Pages Posted: 23 May 2008

See all articles by Michele Mosca

Michele Mosca

University of Naples Federico II

Francesco Pastore

Seconda Università di Napoli - Dipartimento di Discipline Giuridiche ed Economiche Italiane Europee e Comparate; IZA Institute of Labor Economics

Abstract

This paper uses a unique data set containing detailed micro-information on organisations, managers, workers and volunteers belonging to public, private forprofit and private nonprofit institutions delivering social services in Italy. The analysis aims to estimate the determinants of wages across organisations at a sector level focusing on the role of hiring and job search methods, including informal networks. We find that, independent of the organisation type, being hired through public competitions brings with it a substantial wage premium (ranging from 7 to 32%). Informal networks bring with them a wage penalty (-6.5%) in the state sector, where formal hiring methods are common, and a wage premium (6.3%) in social cooperatives and religious institutions, where formal hiring methods are not common. Interestingly, the differences in hiring and in job search methods between state and private organisations explain from 50% to 100% of the conditional wage differentials across organisation types. Our interpretation of these findings is that nonprofit organisations prefer informal recruitment methods not for nepotistic reasons, but to better select the most motivated workers, those who share the nonprofit mission. This paper adds to the previous literature by suggesting that in addition to lower than average monetary compensations, informal recruitment methods are part of the process of self-selection of motivated workers in nonprofit organisations.

Keywords: informal networks, social services, earnings functions, nonprofit organisations, Italy

JEL Classification: I11, J31, J41, L31, L33, L84

Suggested Citation

Mosca, Michele and Pastore, Francesco, Wage Effects of Recruitment Methods: The Case of the Italian Social Service Sector. IZA Working Paper No. 3422, Available at SSRN: https://ssrn.com/abstract=1136227 or http://dx.doi.org/10.1111/j.0042-7092.2007.00700.x

Michele Mosca (Contact Author)

University of Naples Federico II ( email )

via Cinthia, 4
Naples, Caserta 80126
Italy

Francesco Pastore

Seconda Università di Napoli - Dipartimento di Discipline Giuridiche ed Economiche Italiane Europee e Comparate ( email )

Via Antonio Vivaldi, 43
Caserta CE, Caserta 81100
Italy

HOME PAGE: http://www.giurisprudenza.unina2.it/news.php?nid=185

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