Costs and Beneftis of Temporary Contracts

Applying data from 13 waves of the Swiss Labor Force Survey (1991-2003) I assess costs andbenefits of fixed-term contracts. First, I analyze the existence of a contract related wage gapand the effort response of temporary employees in terms of unpaid overtime hours. Second, Iinvestigate whether workers´ absence response to temporary contracts varies across types ofabsences. And third, I examine the impact of temporary contracts on accident rates. I find thattemporary employees suffer a wage gap of 7 percent and provide about 45 percent moreunpaid overtime hours than permanently employed persons. I find neither a significant impactin terms of total absences nor in terms of accidents even though the probability of receivingemployer provided training is by 35 percent lower for temporary employees. Splitting totalabsences in two subcategories yields no significant impact of temporary contracts on absencesdue to accident and illness, but a significant positive effect on absences due to private reasons.The probability of absences due to private reasons is by 124 percent higher for temporaryemployees than for permanent employees. The results in terms of absences are not affected byincluding absences due to missing reasons in the analysis.