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Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)
Journal : Labour Economics, Volume 14, Issue 5, October 2007, Pages 829–847
Focusing on Spain, where fixed-term workers account for a third of the wage and salary workforce, we examine the wage growth implications of fixed-term employment of varying duration while distinguishing between wage growth occurring on-the-job versus via job mobility. Wage growth among employees with indefinite work contracts largely occurs via job mobility, whereas fixed-term workers gain via job mobility as well as on-the-job. Consequently, job stayers with fixed-term contracts a year ago narrow their wage gap with respect to similar counterparts with indefinite-term contracts. Yet, this effect is solely driven by the 10.5 percentage points higher wage growth experienced by fixed-term workers with 6-months contracts able to keep their jobs beyond their initial contract period. Given the limited number of short-term temporary workers in those circumstances, the overall wage gap between past fixed-term and indefinite-term workers is unlikely to vanish in the near future.
The 1990s were characterized by the rapid growth of non-standard work arrangements as the result of both an increased demand on the part of employers and an increased supply of workers who prefer such arrangements. Spain, in particular, constitutes a unique case with more than one third of its total salaried employment in non-standard work arrangements during the past decade (Toharia et al., 2001 and Dolado et al., 2002). The vast majority of these workers were fixed-term workers holding jobs lacking an explicit or implicit contract for long-term employment. Fixed-term jobs may have served as a stepping-stone to better paid jobs, as in the case of school-to-work and welfare-to-work transitions, or may have provided workers with a second household income (e.g. Bugarin, 1998). Nonetheless, workers in fixed-term work arrangements often endure lower job stability and wages than employees in regular, full-time indefinite jobs (Handler, 1995 and Peck and Theodore, 2000). Although some of the lower wages might be due to their generally lower educational attainment and experience, a series of studies have shown that a wage differential among the various types of work contracts remains even after controlling for these workers' characteristics (e.g. Jimeno and Toharia (1993) and Bentolila and Dolado (1994) for the Spanish case). The limited job stability and opportunities for advancement characteristic of fixed-term work arrangements may harm workers through their inability to be promoted to or to access higher paying jobs in the near future, thus, affecting their future wage potential. Consequently, although it may be counterproductive to limit these types of jobs given the existing demand by firms and voluntary supply by some employees, we need to be aware of the implications of fixed-term work arrangements. While previous work has provided evidence of the contemporaneously lower wages earned by fixed-term workers, no studies have yet examined the impact that the duration of fixed-term employment may have on the employee's future wages due to the lack of appropriate longitudinal data on both wages and the duration of the fixed-term contract. Furthermore, the existing literature has not distinguished between wage growth occurring on-the-job when the fixed-term contract is used as a screening device versus wage growth taking place via job-to-job mobility –of special interest given the short-life of fixed-term contracts. Therefore, we pose the following questions: How does the wage growth experienced by workers who have previously held a fixed-term contract compare to that of their counterparts with open-ended (or indefinite) contracts? Does wage growth differ according to the duration of the fixed-term contract held by the employee? How much of this wage growth occurs on-the-job versus via voluntary job mobility? This paper addresses the aforementioned questions with an analysis of the wage growth implications of fixed-term employment of varying duration, while distinguishing between wage growth occurring on-the-job versus via voluntary job mobility. The analysis uses Spanish data from the 1995 through 2001 waves of the European Community Household Panel (ECHP), a unique longitudinal survey containing wage and contract information for the Spanish workforce. In addition to information on the respondent's previous job mobility, the analysis controls for their personal human capital and job-related characteristics possibly affecting any lasting effects of fixed-term employment on wages. Several findings are worth summarizing. First, wage growth among indefinite workers primarily occurs via job mobility. This is to be expected as workers with indefinite-term contracts would not leave the security of their jobs unless a significantly better job opportunity were to come along their way. In contrast, fixed-term employees experience wage gains via job mobility as well as on-the-job. As a result, the wage growth experienced by job stayers with fixed-term contracts a year ago is 4 percentage points higher than the wage growth enjoyed by similar employees with indefinite work contracts. On-the-job wage growth among fixed-term employees may be the payoff to their greater effort in an attempt to keep their jobs (Alba–Ramírez, 1994) or a by-product of the conversion of their temporary work status to indefinite after a preliminary probationary or screening process (e.g. Loh, 1994 and Wang and Weiss, 1998). Secondly, fixed-term workers' wage growth performance varies substantially, not only according to their recent job mobility, but also depending on the duration of the contract held. Specifically, employees with short fixed-term contracts lasting less than 6-months experience the greater on-the-job wage gains of all temporary workers. This is expected to the extent that these workers have been able to keep their jobs beyond the time period stipulated in their contracts. Summarizing, fixed-term workers are able to narrow their wage gap with respect to similar counterparts with indefinite-term contracts in the past; however, this is only true among job stayers. Furthermore, the narrowing of the wage gap between fixed-term and indefinite-term employees is solely driven by the 10.5 percentage points higher wage growth experienced by workers with 6-months contracts who manage to keep their jobs. To the extent that: a) fixed-term contracts of less than 6-months duration only account for less than 20 percent of all fixed-term employment and b) only an average of 34 percent of workers with contracts lasting less than 6-months are able to keep their jobs beyond their initial contract period,2 the wage gap between past fixed-term and indefinite-term employees is likely to persist.
نتیجه گیری انگلیسی
This paper uses Spanish data from the European Community Household Panel to examine the wage growth implications of fixed-term employment depending on the job mobility patterns experienced by the worker. A couple of findings are worth summarizing. First, wage growth for indefinite-term workers primarily occurs via job mobility. To the extent that permanent workers enjoy jobs offering good working conditions, they should be less willing to switch jobs unless the job move implies a significant improvement as would be the case with wage gains. In contrast, fixed-term workers experience similar wage gains via job mobility and on-the-job. Consequently, we find no significantly different payoffs to job mobility between past indefinite and fixed-term workers. Nevertheless, we do find disparities in the wage growth rates enjoyed by past indefinite and fixed-term job stayers. Specifically, wages grow 4 percentage points faster for job stayers with fixed-term contracts a year ago than for their counterparts with indefinite-term contracts. As noted by Alba–Ramírez (1994), Loh (1994), and Wang and Weiss (1998) among others, the greater wage gains enjoyed by fixed-term workers could be explained by their greater effort in an attempt to keep their jobs or by the promotion or conversion of their initial contracts into longer lasting ones after a preliminary screening process. Secondly, we find that wage growth also varies with the duration of the fixed-term contract held by the worker. Specifically, on-the-job wage gains are 10.5 percentage points greater for workers holding contracts lasting less than 6-months than for their counterparts holding indefinite-term contracts in the past. Since wage growth is computed on a yearly basis, temporary job stayers holding contracts lasting less than 6-months one year ago are not surprisingly the ones to experience the largest wage gains. After all, they have been able to keep their jobs beyond their initial contractual agreement and, in most instances, with a new longer-lasting work contract (see Table 1). However, to the extent that: a) fixed-term contracts of less than 6-months duration only account for less than 20 percent of all fixed-term employment and b) only an average of 34 percent of workers with contracts lasting less than 6-months are able to keep their jobs beyond their initial contract period,19 the wage gap between past fixed-term and indefinite-term employees is unlikely to vanish in the near future.