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Measuring the utility cost of temporary employment contracts using a conjoint analysis approach

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Author Info
Pouliakas, Konstantinos
Theodossiou, Ioannis

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Abstract

This study attempts to uncover the anticipated ‘utility loss’ associated with a move to temporary employment contracts, prior to the psychological phenomena of adaptation and coping coming into play. This is done using a conjoint analysis approach that examines the ex ante preferences over different contract statuses of a unique sample of low-skilled employees from seven European countries. Other things equal, it is shown that current permanent workers request a significant wage premium to move from a riskless permanent contract to the insecurity of a temporary job. In contrast, temporary employees, who have presumably adapted to their precarious circumstances, are found to be indifferent between a permanent and a temporary state of affairs. The well-documented distress of unemployment is nevertheless found to hold for both worker types. Overall, the empirical evidence is supportive of arguments that individuals have a psychological immune system which detects and neutralises events that challenge their sense of well-being (such as job insecurity). The methodology developed in this paper can provide policymakers with an alternative and relatively inexpensive method of quantifying the transitional loss (or gain) in welfare that individuals might experience in response to changing labour market policies.

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Publisher Info
Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 7042.

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Date of creation: Jun 2006
Date of revision: Nov 2007
Handle: RePEc:pra:mprapa:7042

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Related research
Keywords: Utility Temporary contracts Conjoint analysis Adaptation

Other versions of this item:

Find related papers by JEL classification:
J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models

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    Other versions:
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  15. van Beek, Krijn W. H. & Koopmans, Carl C. & van Praag, Bernard M. S., 1997. "Shopping at the labour market: A real tale of fiction," European Economic Review, Elsevier, vol. 41(2), pages 295-317, February. [Downloadable!] (restricted)
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  17. Clark, Andrew E & Oswald, Andrew J, 1994. "Unhappiness and Unemployment," Economic Journal, Royal Economic Society, vol. 104(424), pages 648-59, May. [Downloadable!] (restricted)
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