A “Two-Tier” Labour Market for Fixed-Term Jobs? Evaluating Evidence from West Germany Using Quantile Regression

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IZA Seminar

Place: Schaumburg-Lippe-Str. 9, 53113 Bonn

Date: 20.07.2004, 12:15 - 13:30


Presentation by 

Antje Mertens (Berlin School of Economics and Law)


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.

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