A “Two-Tier” Labour Market for Fixed-Term Jobs? Evaluating Evidence from West Germany Using Quantile Regression

Recent discussion of fixed-term contracts tends to ignore the considerable variation in the quality of these jobs and the wages associated with them (e.g. Booth et al., 2002). In this paper the authors develop the concept of a “two-tier” labour market for fixed-term contracts in Germany and test this concept using quantile regression. Using data from the German Socio-Economic Panel (SOEP) they find that those with high-wage fixed-term contracts earn only slightly less than permanent counterparts, those with low-wage temporary jobs earn much less, indicating that Ordinary Least Squares (OLS) regression misses important aspects of the wage structure of fixed-term workers.