Job security perceptions and its effect on wage growth

Abstract

A concern that low job security is constraining wage growth has been expressed in many countries. In this paper, we use Australian household panel data to analyse the drivers of self-assessed job security and its relationship with wage growth. We construct measures of industry-level trade exposure and occupationbased automation risk to assess the conjecture that technological change and globalisation are leading to fears of job loss. We find that those in jobs with a higher trade exposure or automation risk or those working on a casual or fixed-term contract feel more insecure in their job. However, regardless of one’s characteristics, there has been a broad-based fall in job security in recent years that cannot be explained by the model variables. Exploiting the panel dimension of the survey, we find that heightened job insecurity has been a statistically significant but small drag on wage growth. This result is robust to various model specifications.

JEL Codes: C23, F16, J28, J31, O33