European Sociological Review Advance Access published online on February 11, 2009
European Sociological Review, doi:10.1093/esr/jcp005
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Fixed-Term Contracts at Labour Market Entry in West Germany: Implications for Job Search and First Job Quality
Department A, Mannheim Centre for European Social Research (MZES), University of Mannheim, 68131 Mannheim, Germany. Email: michael.gebel{at}mzes.uni-mannheim.de
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.
Manuscript received: July 1, 2007.