Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/121332 
Year of Publication: 
2015
Series/Report no.: 
IZA Policy Paper No. 105
Publisher: 
Institute for the Study of Labor (IZA), Bonn
Abstract: 
We analyse wage differences between permanent and fixed-term contracts across the EU using data from the European Structure of Earnings Survey. We find that, after controlling for individual and job characteristics, workers on permanent contracts earn on average about 15% more than workers on fixed-term contracts with similar observable characteristics. The permanent contract wage premium is higher for men, workers at middle age and with middle education, and performing non-elementary occupations. We also find that permanent workers enjoy a higher wage premium for education and age. We explore cross-country differences in the wage premium for permanent workers and correlate them with indicators of labour market institutions. In particular, results indicate that the wage premium is higher the stricter is employment protection for permanent contracts and the higher the share of temporary employment, which supports the view that workers with fixed-term contracts suffer from a negative wage gap due to lower bargaining power.
Subjects: 
contract type
wage premium
segmentation
JEL: 
J31
J41
J42
Document Type: 
Working Paper

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