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Compensation of On-call and Fixed-term Employment: the Role of Uncertainty

Author

Listed:
  • Marloes de Graaf-Zijl

    (Faculty of Economics and Econometrics, Universiteit van Amsterdam)

Abstract
In this paper I analyse the use and compensation of fixed-term and on-call employment contracts in the Netherlands. I use an analytical framework in which wage differentials result from two types of uncertainty. Quantity uncertainty originates from imperfect foresight in future product demand. I argue that workers who take over part of the quantity uncertainty from the employer get higher payments. Quality uncertainty on the other hand originates from the fact that employers are ex-ante unable to fully observe a workers ability and results in lower wages. Using a combination of propensity score and Mahalanobis matching I analyse wage differentials and find that on-call workers receive compensation for providing quantity flexibility. Compensation of fixed-term contracts on the other hand is dominated by the negative wage effect of quality uncertainty. I investigate whether this relation still holds after the 1999 policy change that had a substantial impact on the attractiveness of on-call and fixed-term workers from the employers perspective. I find that the policy change has not only influenced the use of on-call and fixed-term contracts, but unintentionally also their compensation.

Suggested Citation

  • Marloes de Graaf-Zijl, 2005. "Compensation of On-call and Fixed-term Employment: the Role of Uncertainty," Tinbergen Institute Discussion Papers 05-120/3, Tinbergen Institute.
    • Handle: RePEc:tin:wpaper:20050120
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    File URL: https://papers.tinbergen.nl/05120.pdf
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    References listed on IDEAS

    as
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    7. Marloes de Graaf-Zijl, 2005. "The Attractiveness of Temporary Employment to Reduce Adjustment Costs," Tinbergen Institute Discussion Papers 05-121/3, Tinbergen Institute.
    8. Susan N. Houseman & Arne L. Kalleberg & George A. Erickcek, 2003. "The Role of Temporary Agency Employment in Tight Labor Markets," ILR Review, Cornell University, ILR School, vol. 57(1), pages 105-127, October.
    9. Lewis M. Segal & Daniel G. Sullivan, 1998. "Wage differentials for temporary services work: evidence from administrative data," Working Paper Series WP-98-23, Federal Reserve Bank of Chicago.
    10. Heckman, James J. & Lalonde, Robert J. & Smith, Jeffrey A., 1999. "The economics and econometrics of active labor market programs," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 31, pages 1865-2097, Elsevier.
    11. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages 214-244, June.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Giulio Bosio, 2014. "The Implications of Temporary Jobs on the Distribution of Wages in Italy: An Unconditional IVQTE Approach," LABOUR, CEIS, vol. 28(1), pages 64-86, March.
    2. Marloes de Graaf-Zijl, 2005. "The Anatomy of Job Satisfaction and the Role of Contingent Employment Contracts," Tinbergen Institute Discussion Papers 05-119/3, Tinbergen Institute.
    3. Marloes Graaf-Zijl, 2012. "Job Satisfaction and Contingent Employment," De Economist, Springer, vol. 160(2), pages 197-218, June.
    4. Tatiana Karabchuk, 2012. "Part-time and temporary workers in Russia: winners or losers? [Teilzeitbeschäftigte und befristet Beschäftigte in Russland: Gewinner oder Verlierer?]," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 45(1), pages 23-39, March.
    5. Tatiana Karabchuk & Natalia Soboleva, 2020. "Temporary Employment, Informal Work and Subjective Well-Being Across Europe: Does Labor Legislation Matter?," Journal of Happiness Studies, Springer, vol. 21(5), pages 1879-1901, June.
    6. Marloes de Graaf-Zijl, 2005. "The Attractiveness of Temporary Employment to Reduce Adjustment Costs," Tinbergen Institute Discussion Papers 05-121/3, Tinbergen Institute.
    7. Tatiana KARABCHUK, 2011. "Temporary employment in Russia: why mostly men?," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 10(1), pages 42-60.

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    More about this item

    Keywords

    temporary employment; wage differentials; uncertainty;
    All these keywords.

    JEL classification:

    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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