Recent discussion of fixed-term contracts tends to ignore the considerable variation in the quality of
these jobs and wages associated with them (e.g. Booth et al., 2002). In Germany fixed-term contracts are
disproportionately found among workers with very high qualifications and those with low qualifications.
The authors develop the concept of a "two-tier" labour market for fixed-term contracts and test this
concept using quantile regression, comparing the wages and wage growth of fixed-term and permanent
workers at different points on the wage distribution with data from the German Socio-Economic Panel.
In the case of wages this concept is supported: those with high-wage fixed-term contracts earn only
slightly less than permanent counterparts, those with low-wage temporary jobs earn much less.
However, the wage growth findings do not point to polarisation: many of those with low-paying fixedterm
contracts often experience high wage growth. Summarising, our results indicate that Ordinary Least
Squares (OLS) regression misses important aspects of the wage structure of fixed-term workers, which is
important to bear in mind when assessing the implications of these jobs for the individuals concerned.