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Temporary-Permanent Wage Gap: Does Type of Work and Location in Distribution Matter?

Author

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  • Bill Cochrane

    (University of Waikato)

  • Gail Pacheco

    (Auckland University of Technology)

  • Chao Li

    (University of Waikato)

Abstract

Recent years have seen a push for greater labour market flexibility and an accompanying upsurge of interest in temporary employment and the negative outcomes often associated with such employment arrangements. This study focusses on the pay outcome with respect to the temporary workforce in New Zealand. This country is a useful case study for such analysis, because of the low levels of employment protection legislation afforded to temporary workers relative to the rest of the OECD. We utilise decomposition analysis to assess the size and significance of unexplained wage gaps for both the aggregate group of temporary workers and the subgroups of fixed-term, casual, temporary agency and seasonal workers. Our findings signal that the majority of the temporary-permanent wage differences can be explained by observable characteristics, with no wage gap evident for fixed term workers. We also find varying effects across the wage distribution. Quantile analysis points to a widening wage gap (particularly for casual and temporary agency workers) towards the upper end of the wage distribution, with a growing proportion of the gap that is unexplained.

Suggested Citation

  • Bill Cochrane & Gail Pacheco & Chao Li, 2017. "Temporary-Permanent Wage Gap: Does Type of Work and Location in Distribution Matter?," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 20(2), pages 125-147.
    • Handle: RePEc:ozl:journl:v:20:y:2017:i:2:p:125-147
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    References listed on IDEAS

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    More about this item

    Keywords

    temporary work; compensating wage differential; quantile regression;
    All these keywords.

    JEL classification:

    • J7 - Labor and Demographic Economics - - Labor Discrimination
    • J8 - Labor and Demographic Economics - - Labor Standards
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials

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