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Fixed-term employment and job satisfaction : evidence from individual-level data accounting for selectivity bias


  • Beckmann, Michael

    () (University of Basel)

  • Binz, Andrea
  • Schauenberg, Bernd


The present paper examines the relationship between fixed-term employment and job satisfaction using individual-level data from the German Socio Economic Panel (GSOEP). According to theoretical expectations, fixed-term employment should be associated with a relative low level of job satisfaction, and the majority of empirical investigations is actually in line with this prediction. However, none of these studies accounts for the fact that a worker's choice of whether or not to accept a temporary working contract might substantially be driven by individual characteristics and would then be endogenous. In contrast to prior studies, our preferred model specification explicitly accounts for a potential selectivity bias. The estimation results of our treatment effects model indicate a positive connection between fixedterm employment and job satisfaction. Hence, we conclude that job satisfaction on average is not negatively affected by the pure duration of an employment contract, but by individual characteristics, job-related factors, and working conditions. Nevertheless, we would not recommend firms to replace permanent by fixed-term workers as the latter are more satisfied with their jobs associated with higher motivation and productivity levels. Instead, firms are encouraged to improve working conditions, especially for better educated and more tenured workers.

Suggested Citation

  • Beckmann, Michael & Binz, Andrea & Schauenberg, Bernd, 2007. "Fixed-term employment and job satisfaction : evidence from individual-level data accounting for selectivity bias," Working papers 2007/03, Faculty of Business and Economics - University of Basel.
  • Handle: RePEc:bsl:wpaper:2007/03

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    References listed on IDEAS

    1. Lazear, Edward P & Rosen, Sherwin, 1981. "Rank-Order Tournaments as Optimum Labor Contracts," Journal of Political Economy, University of Chicago Press, vol. 89(5), pages 841-864, October.
    2. Freeman, Richard B, 1978. "Job Satisfaction as an Economic Variable," American Economic Review, American Economic Association, vol. 68(2), pages 135-141, May.
    3. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages 189-213, June.
    4. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
    5. Holmstrom, Bengt & Milgrom, Paul, 1994. "The Firm as an Incentive System," American Economic Review, American Economic Association, vol. 84(4), pages 972-991, September.
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    More about this item


    Fixed-term employment; job satisfaction; selectivity bias;

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • J28 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Safety; Job Satisfaction; Related Public Policy
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation


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