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Flexible Labor Contracts, Firm-specific Pay, and Wages

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Abstract

"In this paper, we use comprehensive employer-employee data for the Netherlands to investigate the labor income effects of flexible labor contracts in two different settings: wage determination as in the AKM model, and an analysis of earnings losses after job displacement. In both settings, we find that flexible contracts lead to lower wages, but that workers with flexible contracts primarily earn less because they work at or join lower paying firms. This suggests that the negative impact of flexible contracts on wage income may be overstated if firm-specific pay differentials are not properly accounted for."

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  • Burak Uras & Jose Carreno & Harry Huizinga, 2026. "Flexible Labor Contracts, Firm-specific Pay, and Wages," Department of Economics Working Papers 2026_104, Department of Economics, Williams College.
    • Handle: RePEc:wil:wileco:2026_104
    DOI: 10.36934/wecon:2026_104
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