IDEAS home Printed from https://ideas.repec.org/a/kap/decono/v171y2023i4d10.1007_s10645-023-09429-9.html
   My bibliography  Save this article

The Price of Flexible Jobs: Wage Differentials between Permanent and Flexible Jobs in the Netherlands

Author

Listed:
  • Cindy Biesenbeek

    (De Nederlandsche Bank)

  • Maikel Volkerink

    (De Nederlandsche Bank)

Abstract

Employees with a flexible contract, i.e., those with either a temporary contract, temporary agency workers, or those on a contract with flexible working hours, face more job and income insecurity than employees with a permanent contract. In theory, wages of flexible jobs should be higher than those of permanent jobs, to compensate for lower job security, lower expected employment outcomes and lower investment in human capital. In many countries, however, wages of flexible jobs are lower than those of permanent jobs. We examine heterogeneity within flexible jobs by estimating wage differentials for specific groups of employees. We use administrative and survey data between 2006 and 2019 for the Netherlands to estimate wage differentials between flexible and permanent employment. We find negative wage differentials for all three types of flexible employment, but most notably for men, the higher educated, temporary agency workers and employees at large firms. Our results are robust to sample selection, alternative measures of occupations, hourly wages, and contract type, and alternative estimation methods.

Suggested Citation

  • Cindy Biesenbeek & Maikel Volkerink, 2023. "The Price of Flexible Jobs: Wage Differentials between Permanent and Flexible Jobs in the Netherlands," De Economist, Springer, vol. 171(4), pages 367-401, December.
    • Handle: RePEc:kap:decono:v:171:y:2023:i:4:d:10.1007_s10645-023-09429-9
    DOI: 10.1007/s10645-023-09429-9
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10645-023-09429-9
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s10645-023-09429-9?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. David H. Autor & Susan N. Houseman, 2010. "Do Temporary-Help Jobs Improve Labor Market Outcomes for Low-Skilled Workers? Evidence from "Work First"," American Economic Journal: Applied Economics, American Economic Association, vol. 2(3), pages 96-128, July.
    2. Egidio Farina & Colin Green & Duncan McVicar, 2021. "Are Estimates of Non‐Standard Employment Wage Penalties Robust to Different Wage Measures? The Case of Zero‐hour Contracts in the UK," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 60(3), pages 370-399, July.
    3. Susan N. Houseman, 2001. "Why Employers Use Flexible Staffing Arrangements: Evidence from an Establishment Survey," ILR Review, Cornell University, ILR School, vol. 55(1), pages 149-170, October.
    4. Thibaut Lamadon & Magne Mogstad & Bradley Setzler, 2022. "Imperfect Competition, Compensating Differentials, and Rent Sharing in the US Labor Market," American Economic Review, American Economic Association, vol. 112(1), pages 169-212, January.
    5. 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.
    6. Pierre Cahuc & Olivier Charlot & Franck Malherbet, 2016. "Explaining The Spread Of Temporary Jobs And Its Impact On Labor Turnover," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57(2), pages 533-572, May.
    7. Alberto Abadie & Guido W. Imbens, 2016. "Matching on the Estimated Propensity Score," Econometrica, Econometric Society, vol. 84, pages 781-807, March.
    8. Albanese, Andrea & Gallo, Giovanni, 2020. "Buy flexible, pay more: The role of temporary contracts on wage inequality," Labour Economics, Elsevier, vol. 64(C).
    9. Cindy Biesenbeek & Siemen Werff, 2019. "Public–Private Wage Differentials: Evidence from The Netherlands," De Economist, Springer, vol. 167(1), pages 23-43, March.
    10. Matteo PICCHIO, 2006. "Wage Differentials between Temporary and Permanent Workers in Italy," Working Papers 257, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    11. Bas Weel, 2018. "The Rise of Temporary Work in Europe," De Economist, Springer, vol. 166(4), pages 397-401, December.
    12. van der Wiel, Karen, 2010. "Better protected, better paid: Evidence on how employment protection affects wages," Labour Economics, Elsevier, vol. 17(1), pages 16-26, January.
    13. Jahn, Elke J. & Pozzoli, Dario, 2013. "The pay gap of temporary agency workers — Does the temp sector experience pay off?," Labour Economics, Elsevier, vol. 24(C), pages 48-57.
    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 214-244, June.
    15. Pierre Cahuc & Olivier Charlot & Franck Malherbet, 2016. "Explaining The Spread Of Temporary Jobs And Its Impact On Labor Turnover," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 533-572, May.
    16. Origo, Federica & Pagani, Laura, 2009. "Flexicurity and job satisfaction in Europe: The importance of perceived and actual job stability for well-being at work," Labour Economics, Elsevier, vol. 16(5), pages 547-555, October.
    17. Per Skedinger, 2018. "Non-standard Employment in Sweden," De Economist, Springer, vol. 166(4), pages 433-454, December.
    18. Jonneke Bolhaar & Marloes Graaf-Zijl & Bas Scheer, 2018. "Three Perspectives on the Dutch Growth of Flexible Employment," De Economist, Springer, vol. 166(4), pages 403-432, December.
    19. Kurt Lavetti, 2023. "Compensating Wage Differentials in Labor Markets: Empirical Challenges and Applications," Journal of Economic Perspectives, American Economic Association, vol. 37(3), pages 189-212, Summer.
    20. Pedro Portugal & José Varejão, 2010. "The Hidden Side of Temporary Employment: Fixed-term Contracts as a Screening Device," Working Papers w201029, Banco de Portugal, Economics and Research Department.
    21. Piet Allaart & Lutz Bellmann, 2007. "Reasons for part‐time work: an empirical analysis for Germany and The Netherlands," International Journal of Manpower, Emerald Group Publishing Limited, vol. 28(7), pages 557-570, October.
    22. Chang‐Tai Hsieh & Erik Hurst & Charles I. Jones & Peter J. Klenow, 2019. "The Allocation of Talent and U.S. Economic Growth," Econometrica, Econometric Society, vol. 87(5), pages 1439-1474, September.
    23. Paul Sullivan, & Ted To, 2013. "Job Dispersion and Compensating Wage Differentials," Working Papers 469, U.S. Bureau of Labor Statistics.
    24. Poulissen, Davey & De Grip, Andries & Fouarge, Didier & Künn-Nelen, Annemarie, 2023. "Employers’ willingness to invest in the training of temporary versus permanent workers: A discrete choice experiment," Labour Economics, Elsevier, vol. 84(C).
    25. Mattia Filomena & Matteo Picchio, 2022. "Are temporary jobs stepping stones or dead ends? A systematic review of the literature," International Journal of Manpower, Emerald Group Publishing Limited, vol. 43(9), pages 60-74, August.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Garcia-Louzao, Jose & Hospido, Laura & Ruggieri, Alessandro, 2023. "Dual returns to experience," Labour Economics, Elsevier, vol. 80(C).
    2. Normann Rion, 2019. "Waiting for the Prince Charming: Fixed-Term Contracts as Stopgaps," PSE Working Papers halshs-02331887, HAL.
    3. Diego Daruich & Sabrina Di Addario & Raffaele Saggio, 2023. "The Effects of Partial Employment Protection Reforms: Evidence from Italy," Review of Economic Studies, Oxford University Press, vol. 90(6), pages 2880-2942.
    4. Martins, Pedro S., 2021. "Should the maximum duration of fixed-term contracts increase in recessions? Evidence from a law reform," International Review of Law and Economics, Elsevier, vol. 68(C).
    5. Bentolila, Samuel & Dolado, Juan J. & Jimeno, Juan F., 2019. "Dual Labour Markets Revisited," IZA Discussion Papers 12126, Institute of Labor Economics (IZA).
    6. Pedro Portugal & José Varejão, 2022. "Why do firms use fixed-term contracts?," Portuguese Economic Journal, Springer;Instituto Superior de Economia e Gestao, vol. 21(3), pages 401-421, September.
    7. Albanese, Andrea & Gallo, Giovanni, 2020. "Buy flexible, pay more: The role of temporary contracts on wage inequality," Labour Economics, Elsevier, vol. 64(C).
    8. Brigitte Granville & Jaume Martorell Cruz, 2016. "Squared Segmentation: How the Insider/Outsider divide across Public/Private Employment shapes attitudes towards markets," Working Papers 78, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    9. Di Addario, Sabrina & Kline, Patrick & Saggio, Raffaele & Sølvsten, Mikkel, 2023. "It ain’t where you’re from, it’s where you’re at: Hiring origins, firm heterogeneity, and wages," Journal of Econometrics, Elsevier, vol. 233(2), pages 340-374.
    10. Pierre Cahuc & Pauline Carry & Franck Malherbet & Pedro S Martins, 2022. "Employment Effects of Restricting Fixed-Term Contracts: Theory and Evidence," Working Papers hal-03881622, HAL.
    11. Daniela Campos Ugaz, 2022. "Time precarity at work: nonstandard forms of employment and everyday life," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 164(2), pages 969-991, November.
    12. Bassanini, Andrea & Caroli, Eve & Fontaine, François & Rebérioux, Antoine, 2021. "Escaping social pressure: Fixed-term contracts in multi-establishment firms," Journal of Economic Behavior & Organization, Elsevier, vol. 188(C), pages 697-715.
    13. Daniela Sonedda, 2020. "Guess who's there: employment protection legislation and the degree of substitutability between labour contracts," IAAEU Discussion Papers 202007, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    14. Fiaschi, Davide & Tealdi, Cristina, 2024. "Let's Roll Back! The Challenging Task of Regulating Temporary Contracts," IZA Discussion Papers 16777, Institute of Labor Economics (IZA).
    15. Smirnykh, Larisa & Wörgötter, Andreas, 2019. "The importance of institutional and organizational characteristics for the use of fixed-term contracts in Russia," Journal of East European Management Studies, Nomos Verlagsgesellschaft mbH & Co. KG, vol. 24(1), pages 89-121.
    16. Juan J. Dolado & Etienne Lalé & Nawid Siassi, 2021. "From dual to unified employment protection: Transition and steady state," Quantitative Economics, Econometric Society, vol. 12(2), pages 547-585, May.
    17. Normann Rion, 2021. "Job creation in a dual labor market: a constructivist approach," Working Papers hal-03125344, HAL.
    18. Giovanni S.F. Bruno & Floro E. Caroleo & Orietta Dessy, 2013. "Stepping stones versus dead end jobs: exits from temporary contracts in Italy after the 2003 reform," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 121(1), pages 31-62.
    19. Rouvroye, Lin & van Dalen, Hendrik Peter & Henkens, C.J.I.M. & Schippers, J.J., 2022. "Employers’ views on flexible employment contracts for younger workers: Benefits, downsides and societal outlook," Other publications TiSEM e059584d-cfb1-4319-b09e-7, Tilburg University, School of Economics and Management.
    20. Giulio Bosio, 2014. "The Implications of Temporary Jobs on the Distribution of Wages in Italy: An Unconditional IVQTE Approach," LABOUR, CEIS, vol. 28(1), pages 64-86, March.

    More about this item

    Keywords

    Wage gap; Flexible employment; Earnings; Hourly wages; Wage differential; Non-standard work;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:decono:v:171:y:2023:i:4:d:10.1007_s10645-023-09429-9. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.