Fixed-term contracts in East and West Germany: Low wages, poor prospects?
AbstractAmid lively debate on the consequences of temporary employment, the paper examines the wages and transitions of temporary employees in Germany using socio-economic panel data from the late 1990s. Compared to simple OLS estimates, using a fixed effects model decreases wage differentials between permanent and temporary workers. A two-step instrumental variables estimator leads to insignificant estimates, suggesting that the contract type is an endogenous variable. Moreover, about 1/5 of male temporary employees experience significantly higher 2 and 10 year wage growth than workers on permanent contracts. Using multinomial logistic regression models we find that many temporary workers move into permanent jobs, often with the same employer. For some temporary employment leads to unemployment, particularly those with low human capital. Positioning ourselves between arguments on the positive and negative consequences of temporary employment, we develop the idea of a two-tier labour market for temporary employment in Germany. --
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Bibliographic InfoPaper provided by Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes in its series SFB 373 Discussion Papers with number 2002,72.
Date of creation: 2002
Date of revision:
mobility; unemployment; Fixed-term contracts; dynamic wages;
Find related papers by JEL classification:
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
- J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search
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