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Fixed-term contracts at labour market entry in West Germany: implications for job search and first job quality

Fixed-term contracts have become very relevant in the transition from school to work. Using data from the German Socio-Economic Panel (GSOEP) for the period 1984-2006, this article analyses differences in the timing of receiving a fixed-term contract or a permanent contract throughout the duration of first-job search and whether fixed-term contracts are associated with lower initial wages. Competing risk duration models reveal that school leavers initially receive more often permanent contracts but that a certain proportion also accepts temporary jobs. For transitions to both fixed-term and permanent contracts, we find that the longer the time spent searching for a job, the lower the transition probability to a job. The negative duration dependence effect is even more pronounced for fixed-term employment. Comparing labour market entrants with similar individual and job characteristics using propensity score matching techniques show that entrants earn significantly less in fixed-term jobs compared to permanent employment. Wage penalties are slightly larger for those who actually choose fixed-term contracts in their first job, whereas randomly allocated job entrants would suffer lower wage losses. Especially graduates from tertiary education suffer high initial wage losses in fixed-term contracts.

Fixed-term contracts have become very relevant in the transition from school to work. Using data from the German ...  Show Full Abstract  

Authors: Gebel, Michael
Date: 2009
Geographic subjects: Germany; Europe
Journal title: European sociological review
Resource type: Article
Subjects: Employment; Higher education; Income;

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