Tradeoff or Winner Take All? Relationships between Job Security and Earnings in 32 Countries

Abstract

Whereas some researchers suggest that workers face a tradeoff between job security and earnings, others imply that low earnings and high unemployment risks tend to accompany each other. Despite the contradictory views, direct evidence on whether, holding skill levels constant, insecure jobs pay more—or less—is lacking. Equally lacking is an understanding of how the national context may condition the way in which job security is associated with earnings. Using cross-national data from the International Social Survey Programme, this study examines the association between self-reported job security and earnings. Results indicate that jobs perceived to be more secure unequivocally pay more. The positive association between job security and earnings remains even after controlling an extensive set of job and individual characteristics, including detailed occupational categories, possession of irreplaceable skills, and risk-related personality traits. Furthermore, this positive association is universal; it is found within different employment sectors and occupations, as well as for both men and women. Although workers who perceive themselves as having lower risks of job loss generally earn more, they earn especially more in countries with higher unemployment rates and greater income inequality. Within Organisation for Economic Co-operation and Development (OECD) countries, however, the earnings gap between those with secure and insecure jobs is smaller when the unemployment benefits replace a greater amount of the earnings prior to the job loss.