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‘Atypical Work’ and Compensation

  • John T. Addison

    (University of South Carolina (U.S.A.), GEMF/Universidade de Coimbra (Portugal) and IZA (Germany))

  • Christopher J. Surfield

    (Department of Business Administration, Lander University)

Atypical work, or alternative work arrangements in U.S. parlance, has long been criticized in popular debate as providing poorly-compensated employment. Although the early U.S. literature seemed to confirm this perception, more recent cet. par. analysis has offered a partial but somewhat more optimistic evaluation. The present paper builds on the latter body of research with a view to providing improved estimates of the effect of the full range alternative work arrangements on worker compensation. The improvements are basically two-fold. First, we account for the skewness in atypical worker earnings while retaining the Mincerian human capital earnings function. Second, we deploy additional waves of the main dataset on atypical workers (the CAEAS), while supplementing this cross-section analysis with longitudinal data from the NLSY. Our analysis covers earnings and (access to) health benefits. We report that although one group of atypical workers (contractors) seems to enjoy a wage premium, cross-section results from the CPS and NLSY for the better-known category of temporary workers point to a negative wage differential of some 6-15 percent. It emerges that much of the disparity stems from unobserved worker heterogeneity, accounting for which still supports a wage advantage for contracting work. As far as fringes are concerned, the appearance in cross section of a potentially large deficit in access to health benefits is again reduced after accounting for the permanent unobserved individual heterogeneity, although in this case the attenuation is much more modest.

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Paper provided by GEMF - Faculdade de Economia, Universidade de Coimbra in its series GEMF Working Papers with number 2005-14.

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Length: 56 pages
Date of creation: 2005
Date of revision:
Publication status: Published in Southern Economic Journal, 73(4), April 2007
Handle: RePEc:gmf:wpaper:2005-14
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  1. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2003. "The role of temporary agency employment in tight labor markets," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 57(1), pages 105-127, October.
  2. David H. Autor, 2001. "Why Do Temporary Help Firms Provide Free General Skills Training?," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1409-1448, November.
  3. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
  4. Katharine G. Abraham & Susan K. Taylor, 1993. "Firms' Use of Outside Contractors: Theory and Evidence," NBER Working Papers 4468, National Bureau of Economic Research, Inc.
  5. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
  6. Hirsch, Barry, 2004. "Why Do Part-Time Workers Earn Less? The Role of Worker and Job Skills," IZA Discussion Papers 1261, Institute for the Study of Labor (IZA).
  7. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages F189-F213, June.
  8. Chris Forde & Gary Slater, 2004. "Agency working in Britain: character, consequences and regulation," Working Papers 2004/4, Nottingham Trent University, Nottingham Business School, Economics Division.
  9. Blackburn, McKinley L., 2007. "Estimating wage differentials without logarithms," Labour Economics, Elsevier, vol. 14(1), pages 73-98, January.
  10. Heinrich, Carolyn J. & Mueser, Peter R. & Troske, Kenneth, 2002. "Welfare to Temporary Work: Implications for Labor Market Outcomes," IZA Discussion Papers 584, Institute for the Study of Labor (IZA).
  11. Lewis M. Segal & Daniel G. Sullivan, 1997. "The Growth of Temporary Services Work," Journal of Economic Perspectives, American Economic Association, vol. 11(2), pages 117-136, Spring.
  12. John T. Addison & Christopher J. Surfield, 2006. "The Use of Alternative Work Arrangements by the Jobless: Evidence from the CAEAS/CPS," Journal of Labor Research, Transaction Publishers, vol. 27(2), pages 149-162, April.
  13. Hirsch, Barry & Schumacher, Edward J., 2003. "Match Bias in Wage Gap Estimates Due to Earnings Imputation," IZA Discussion Papers 783, Institute for the Study of Labor (IZA).
  14. Susan N. Houseman & Anne E. Polivka, 1999. "The Implications of Flexible Staffing Arrangements for Job Stability," Upjohn Working Papers and Journal Articles 99-56, W.E. Upjohn Institute for Employment Research.
  15. Lewis M. Segal & Daniel G. Sullivan, 1998. "Wage differentials for temporary services work: evidence from administrative data," Working Paper Series WP-98-23, Federal Reserve Bank of Chicago.
  16. Marco Manacorda, 2004. "Can the Scala Mobile Explain the Fall and Rise of Earnings Inequality in Italy? A Semiparametric Analysis, 19771993," Journal of Labor Economics, University of Chicago Press, vol. 22(3), pages 585-614, July.
  17. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October.
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