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Title:Temporary contracts and monopsony power in the UK labour market PDF Logo
Authors:Tabasso, Domenico
Issue Date:2011
Series/Report no.:Discussion paper series // Forschungsinstitut zur Zukunft der Arbeit 5867
Abstract:This paper addresses the applicability of the theory of equalizing differences (Rosen, 1987) in a market in which temporary and permanent workers co-exist. The assumption of perfect competition in the labour market is directly questioned and a model is developed in which the labour market is described as a duopsony and the relation between wage and non-monetary job characteristics is studied for workers with different contract lengths. The empirical analysis, based on several waves of the UK Labour Force Data, confirms several of the hypotheses suggested by the model and emphasizes how in the short run workers who have experienced a change in their employer can expect a career trajectory in line with the theory on compensating differentials. In particular, while the wage dynamic related to workers shifting from a temporary contract to another temporary position cannot be exactly predicted, shifts from temporary to permanent contracts tend to be linked to a reduction in wages and a simultaneous increase in travel-to-work distance. Nonetheless, when unobserved characteristics are accounted for in the selection process into temporary contracts, these results lose significance and only a positive relation between wage and commuting time persists, irrespective of the type of contract.
Subjects:atypical contracts
oligopsony
compensating differentials
commuting time
JEL:J22
J31
J41
J42
L13
Persistent Identifier of the first edition:urn:nbn:de:101:1-201108092947
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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