Monday, 20 May 2013

Is a Temporary Job Better Than Unemployment? A Cross-country Comparison Based on British, German, and Swiss Panel Data

SOEPpapers on Multidisciplinary Panel Data Research (number 543-2013) by Michael Gebel (University of Mannheim) published by SOEP


While many previous studies on temporary work have found disadvantages for temporary workers as compared to workers with a permanent contract, this study compares temporary work to the alternative of unemployment. Specifically, this paper investigates the potential integrative power of taking up a temporary job for unemployed workers as compared to the counterfactual situation of remaining unemployed and searching for another job.

Applying a dynamic propensity-score matching approach based on British, (West and East) German, and Swiss panel data during the period of 1991–2009, it is shown that taking up a temporary job increases the employment chances during the subsequent five years in (West and East) Germany and the UK.

Moreover, the chances of having a permanent contract remain higher and a persistent wage premium can be found during the subsequent five years of the career. Advantages of taking up a temporary job are slightly stronger in West Germany compared to East Germany, where temporary contracts are often based on public job creation measures with limited integration potential.

Neither long-run advantages nor disadvantages of taking up a temporary job can be found in the case of the flexible Swiss labour market

JEL classification: C14, C41, J41, J60, J64

Full text (PDF 32pp)

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