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Firms and the Wage Penalty of Temporary Work

Author

Listed:
  • Ana Figueiredo
  • Agnieszka Markiewicz
  • Elliott Weder

Abstract

Using matched employer-employee data from the Netherlands, we decompose the wage penalty of temporary work. Temporary workers earn 28 log points less per hour than permanent workers. Worker fixed effects explain half this gap, while firm pay premia account for 28%. Most of the firm contribution reflects temporary workers sorting into low-paying firms rather than within-firm pay differences. As temporary employment differs substantially across demographic groups, we extend our framework to gender and native-migrant wage gaps, separating contract from firm sorting. Differential exposure to temporary work explains part of the native-migrant firm pay-premia gap but matters little for the gender wage gap.

Suggested Citation

  • Ana Figueiredo & Agnieszka Markiewicz & Elliott Weder, 2026. "Firms and the Wage Penalty of Temporary Work," RFBerlin Discussion Paper Series 26240, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26240
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    Keywords

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    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts

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