Measuring the Utility Cost of Temporary Employment Contracts Before Adaptation: A Conjoint Analysis Approach

This study attempts to estimate the 'utility cost' of temporary employment contracts purged of the psychological effects of adaptation. A conjoint analysis experiment is used that examines the "ex ante" contract preferences of a unique sample of low-skilled employees from seven European countries. It is shown that permanent contract holders request a significant wage premium to move to a temporary job. In contrast, temporary workers are indifferent between permanent and temporary contracts, "ceteris paribus". The evidence suggests that individuals have a "psychological immune system" which neutralizes events that challenge their sense of wellbeing, such as job insecurity. Copyright (c) The London School of Economics and Political Science 2009.