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The Cost of Flexibility at the Margin. Comparing the Wage Penalty for Fixed-term Contracts in Germany and Spain using Quantile Regression

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  • Antje Mertens
  • Vanessa Gash
  • Frances McGinnity

Abstract

Germany and Spain are typically regarded as 'rigid' economies, yet both have had different experiences of fixed-term jobs. Using quantile regression we find that in West Germany the earnings of permanent and fixed-term workers are most similar among high earners and most dissimilar among low earners. In Spain, the wage penalty shows little variation across the distribution of wages. This pattern was also found for different occupational groups, although there are clear differences in the absolute wage penalty across occupations. In conclusion we caution against generalizing findings from Spain to other 'rigid' European labour markets. Copyright 2007 The Authors. Journal compilation CEIS, Fondazione Giacomo Brodolini and Blackwell Publishing Ltd. 2007.

Suggested Citation

  • Antje Mertens & Vanessa Gash & Frances McGinnity, 2007. "The Cost of Flexibility at the Margin. Comparing the Wage Penalty for Fixed-term Contracts in Germany and Spain using Quantile Regression," LABOUR, CEIS, vol. 21(4-5), pages 637-666, December.
  • Handle: RePEc:bla:labour:v:21:y:2007:i:4-5:p:637-666
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    Cited by:

    1. Christian Pfeifer, 2012. "Fixed-term contracts and wages revisited using linked employer-employee data," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 45(2), pages 171-183, July.
    2. Dias da Silva, António & Turrini, Alessandro, 2015. "Precarious and Less Well Paid? Wage Differences between Permanent and Fixed-term Contracts across the EU," IZA Policy Papers 105, Institute for the Study of Labor (IZA).
    3. Gail Pacheco & Bill Cochrane, 2015. "Decomposing the temporary-permanent wage gap in New Zealand," Working Papers 2015-07, Auckland University of Technology, Department of Economics.
    4. Raúl Ramos & Esteban Sanromá & Hipólito Simón, 2014. "Public-Private Sector Wage Differentials by Type of Contract: Evidence from Spain," Hacienda Pública Española, IEF, vol. 208(1), pages 107-141, March.
    5. Berton, Fabio & Migheli Matteo, 2015. "Estimating the marginal rate of substitution between wage and employment protection," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201529, University of Turin.
    6. Jeroen Horemans, 2016. "Polarisation of Non-standard Employment in Europe: Exploring a Missing Piece of the Inequality Puzzle," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 171-189, January.
    7. Marta Silva & Luis Filipe Martins & Helena Lopes, 2015. "Asymmetric labour market reforms and wage growth with fixed-term contracts: does learning about match quality matter?," Working Papers Series 2 15-04, ISCTE-IUL, Business Research Unit (BRU-IUL).
    8. Inga Lass & Mark Wooden, 2017. "The Structure of the Wage Gap for Temporary Workers: Evidence from Australian Panel Data," Melbourne Institute Working Paper Series wp2017n08, Melbourne Institute of Applied Economic and Social Research, The University of Melbourne.
    9. Jeroen Horemans, 2016. "Polarisation of Non-standard Employment in Europe: Exploring a Missing Piece of the Inequality Puzzle," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 125(1), pages 171-189, January.
    10. Sebastian NIELEN & Alexander SCHIERSCH, 2016. "Productivity in German manufacturing firms: Does fixed-term employment matter?," International Labour Review, International Labour Organization, vol. 155(4), pages 535-561, December.
    11. Allmendinger, Jutta & Hipp, Lena & Stuth, Stefan, 2013. "Atypical employment in Europe 1996-2011," Discussion Papers, Presidential Department P 2013-003, Social Science Research Center Berlin (WZB).
    12. Patrizia Ordine & Giuseppe Rose, 2016. "Two-tier labor market reform and entry wage of protected workers: evidence from Italy," Empirical Economics, Springer, vol. 51(1), pages 339-362, August.
    13. Luz Karime Abadía Alvarado, 2014. "The effects of fixed-term contracts on workers in Colombia," REVISTA CUADERNOS DE ECONOMÍA, UN - RCE - CID, August.
    14. Christian Pfeifer, 2014. "A Note on Dual Internal Labor Markets and Wages of Temporary Workers: Evidence from Linked-Employer-Employee Data," Journal of Labor Research, Springer, vol. 35(2), pages 133-142, June.
    15. Perugini, Cristiano & Pompei, Fabrizio, 2016. "Employment protection and wage inequality within education groups in Europe," Journal of Policy Modeling, Elsevier, vol. 38(5), pages 810-836.
    16. Perugini, Cristiano & Pompei, Fabrizio, 2017. "Temporary Jobs, Institutions, and Wage Inequality within Education Groups in Central-Eastern Europe," World Development, Elsevier, vol. 92(C), pages 40-59.

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