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Temporary Contracts and Employee Effort

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Author Info
Engellandt, Axel (University of Basel)
Riphahn, Regina T. () (University of Basel, CEPR, DIW Berlin and IZA Bonn)

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Abstract

Temporary contracts provide employers with a tool to screen potential new employees and have been shown to provide "stepping stones" into permanent employment for workers. For both reasons workers on temporary contracts have an incentive to provide more effort than permanent employees. Using indicators for unpaid overtime work and absences taken from the Swiss Labor Force Survey we present evidence that temporary workers indeed provide higher effort than permanent employees: Their probability of working unpaid overtime exceeds that of permanently employed workers by 60 percent. We show the heterogeneity of this effect across different types of temporary contracts, investigate differences between men and women, and discuss the relevance of adverse selection into temporary employment.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 780.

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Length: 28 pages
Date of creation: May 2003
Date of revision:
Handle: RePEc:iza:izadps:dp780

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Related research
Keywords: temporary work; contract-based incentives; absenteeism; overtime; moral hazard; career concerns;

Other versions of this item:

Find related papers by JEL classification:
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
M50 - Business Administration and Business Economics; Marketing; Accounting - - Personnel Economics - - - General
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages F189-F213, June. [Downloadable!] (restricted)
    Other versions:
  2. Holmlund, Bertil & Storrie, Donald, 2002. "Temporary Work in Turbulent Times: The Swedish Experience," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  3. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, vol. 9(1), pages 63-91, February. [Downloadable!] (restricted)
  4. Guadalupe, Maria, 2003. "The hidden costs of fixed term contracts: the impact on work accidents," Labour Economics, Elsevier, vol. 10(3), pages 339-357, June. [Downloadable!] (restricted)
    Other versions:
  5. Tim A. Barmby & Marco G. Ercolani & John G. Treble, 2002. "Sickness Absence: An International Comparison," Economic Journal, Royal Economic Society, vol. 112(480), pages F315-F331, June. [Downloadable!] (restricted)
    Other versions:
  6. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2002. "Labour as a Buffer: Do Temporary Workers Suffer?," IZA Discussion Papers 673, Institute for the Study of Labor (IZA). [Downloadable!]
  7. Riphahn, Regina T. & Thalmaier, Anja, 1999. "Behavioral Effects of Probation Periods: An Analysis of Worker Absenteeism," IZA Discussion Papers 67, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  8. Barmby, Tim, 2002. "Worker absenteeism: a discrete hazard model with bivariate heterogeneity," Labour Economics, Elsevier, vol. 9(4), pages 469-476, September. [Downloadable!] (restricted)
  9. Michael Gerfin & Michael Lechner, 2002. "A Microeconometric Evaluation of the Active Labour Market Policy in Switzerland," Economic Journal, Royal Economic Society, vol. 112(482), pages 854-893, October. [Downloadable!] (restricted)
    Other versions:
  10. Barmby, T A & Orme, C D & Treble, John G, 1991. "Worker Absenteeism: An Analysis Using Microdata," Economic Journal, Royal Economic Society, vol. 101(405), pages 214-29, March. [Downloadable!] (restricted)
    Other versions:
  11. Alison L Booth & Juan J. Dolado & Jeff Frank, 2002. "Symposium On Temporary Work Introduction," Economic Journal, Royal Economic Society, vol. 112(480), pages F181-F188, June. [Downloadable!] (restricted)
  12. Lazear, E.P. & Rosen, S., 1988. "Male-Female Wage Differentials In Job Ladders," Papers e-88-18, Stanford - Hoover Institution.
    Other versions:
  13. Ichino, Andrea & Riphahn, Regina T., 2001. "The Effect of Employment Protection on Worker Effort: A Comparison of Absenteeism During and After Probation," IZA Discussion Papers 385, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  14. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June. [Downloadable!] (restricted)
  15. Segal, Lewis M & Sullivan, Daniel G, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 117-36, Spring. [Downloadable!] (restricted)
  16. Gibbons, Robert & Murphy, Kevin J, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 468-505, June. [Downloadable!] (restricted)
    Other versions:
  17. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June. [Downloadable!] (restricted)
    Other versions:
  18. Robert Gibbons & Kevin J. Murphy, 1992. "Optimal Incentive Contracts in the Presence of Career Concerns: Theory and Evidence," NBER Working Papers 3792, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Boockmann, Bernhard & Hagen, Tobias, 2005. "Fixed-term Contracts as Sorting Mechanisms: Evidence From Job Durations in West Germany," ZEW Discussion Papers 05-85, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
    Other versions:
  3. repec:ese:iserwp: is not listed on IDEAS
  4. Meyer, Anna & Wallette, Mårten, 2005. "Absence of Absenteeism and Overtime work – Signaling Factors for Temporary Workers?," Working Papers 2005:15, Lund University, Department of Economics. [Downloadable!]
  5. Alexander Muravyev, 2007. "Firm Size, Wages and Unobserved Skills: Evidence from Dual Job Holdings in the UK," Discussion Papers of DIW Berlin 681, DIW Berlin, German Institute for Economic Research. [Downloadable!]
  6. Dolado, Juan J. & Stucchi, Rodolfo, 2008. "Do Temprary Contracts Affect TFP? Evidence from Spanish Manufacturing Firms," CEPR Discussion Papers 7055, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  7. Engellandt, Axel & Riphahn, Regina T., 2004. "Incentive Effects of Bonus Payments: Evidence from an International Company," IZA Discussion Papers 1229, Institute for the Study of Labor (IZA). [Downloadable!]
  8. Steve Bradley & Colin Green & Gareth Leeves, 2007. "Employment contracts and effort: why do temporary workers take less absence?," Working Papers 005102, Lancaster University Management School, Economics Department. [Downloadable!]
  9. Miguel A. Malo & Fernando Munoz-Bullon, 2008. "Working career progress in the tourism industry: Temp-to-perm transitions in Spain," Business Economics Working Papers wb083510, Universidad Carlos III, Departamento de Economía de la Empresa. [Downloadable!]
  10. Nicolas R. Ziebarth, 2009. "Long-Term Absenteeism and Moral Hazard: Evidence from a Natural Experiment," SOEPpapers 172, DIW Berlin, The German Socio-Economic Panel (SOEP). [Downloadable!]
    Other versions:
  11. Damiani, Mirella & Pompei, Fabrizio, 2009. "Labour protection and productivity in the European economies: 1995-2005," MPRA Paper 12710, University Library of Munich, Germany. [Downloadable!]
  12. Pouliakas, Konstantinos & Theodoropoulos, Nikolaos, 2009. "Variety of Performance Pay and Firm Performance: Effect of Financial Incentives on Worker Absence and Productivity," MPRA Paper 18238, University Library of Munich, Germany. [Downloadable!]
  13. Alessandra Venturini & Gil S. Epstein, 2006. "Migration, effort, and voter sentiment towards temporary migration," CHILD Working Papers wp18_06, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
  14. Emanuela Ghignoni, 2008. "Temporary contracts, employees’ effort and labour productivity: the evidence for Italy," Working Papers 111, Sapienza University of Rome, Department of Public Economics. [Downloadable!]
  15. De Paola, Maria, 2008. "Absenteeism and Peer Interaction Effects: Evidence from an Italian Public Institute," MPRA Paper 11425, University Library of Munich, Germany. [Downloadable!]
  16. Wallette, Mårten, 2004. "Temporary Jobs and the Exit to Open-Ended Jobs in the Swedish Labour Market," Working Papers 2005:14, Lund University, Department of Economics. [Downloadable!]
  17. Olsson, Martin, 2007. "Employment Protection and Sickness Absence," Working Paper Series 717, Research Institute of Industrial Economics.
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