Social Indicators Research

, Volume 147, Issue 1, pp 111–132 | Cite as

Temporary Employment Contracts and Household Income

  • Inga Laß
  • Mark WoodenEmail author


It is widely accepted that temporary jobs tend to be associated with low pay which, in turn, will have negative consequences for household income. Evidence in support of such claims, however, is relatively thin. This study seeks to fill this void. In particular, it is both the first study to examine the consequences of temporary employment for workers’ household income within a multivariate framework, and the first to quantify the relative importance of the different channels through which temporary employment affects income. Regression and decomposition analyses are applied to longitudinal survey data from Australia, a country where the incidence of temporary forms of employment, and especially casual work, is very high by Western standards. Contrary to expectations, employment on a fixed-term contract is associated with significantly higher household incomes than permanent workers. In contrast, workers in casual and temporary agency employment are indeed found to live in households with lower average incomes than permanent workers. The estimated size of the income penalty is about 11% for temporary agency workers and 20% for casual employees. These differentials, however, are not primarily the result of lower wages, but instead are mainly due to the fewer hours worked by these groups. In the case of casual workers, lower annual individual earnings are partly offset by higher incomes of other household members. This compensatory effect, while not small, is still insufficient in size to fully close the income gap to permanent workers.


Casual work Decomposition analysis HILDA Survey Household income Temporary employment 



This paper uses confidentialised unit record file data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey. The HILDA Survey Project was initiated and is funded by the Australian Government Department of Social Services and is managed by the Melbourne Institute of Applied Economic and Social Research. This research was also supported under the Australian Research Council’s Discovery Projects funding scheme (Project # DP160103171).


  1. Amuedo-Dorantes, C., & Serrano-Padial, R. (2010). Labor market flexibility and poverty dynamics. Labour Economics,17(4), 632–642.Google Scholar
  2. Becker, G. S. (1981). A treatise on the family. Cambridge, MA: Harvard University Press.Google Scholar
  3. Blackwell, D. L., & Lichter, D. T. (2004). Homogamy among dating, cohabiting, and married couples. The Sociological Quarterly,45(4), 719–737.Google Scholar
  4. Blinder, A. S. (1973). Wage discrimination: Reduced form and structural estimates. Journal of Human Resources,8(4), 436–455.Google Scholar
  5. Blossfeld, H.-P., Buchholz, S., Bukodi, E., & Kurz, K. (2008). Young workers, globalization and the labor market: Comparing early working life in eleven countries. Cheltenham: Edward Elgar.Google Scholar
  6. Booth, A. L., Francesconi, M., & Frank, J. (2002). Temporary jobs: Stepping stones or dead ends? The Economic Journal,112(480), F189–F213.Google Scholar
  7. Booth, A. L., & Wood, M. (2008). Back-to-front down under? Part-time/full-time wage differentials in Australia. Industrial Relations,47(1), 114–135.Google Scholar
  8. Bosio, G. (2014). The implications of temporary jobs on the distribution of wages in Italy: An unconditional IVQTE approach. Labour,28(1), 64–86.Google Scholar
  9. Buchler, S., Haynes, M., & Baxter, J. (2009). Casual employment in Australia: The influence of employment contract on financial well-being. Journal of Sociology,45(3), 271–289.Google Scholar
  10. Castles, F. G. (1994). The wage earners’ welfare state revisited: Refurbishing the established model of Australian social protection, 1983–1993. Australian Journal of Social Issues,29(2), 120–145.Google Scholar
  11. Debels, A. (2008). Transitions out of temporary jobs: Consequences for employment and poverty across Europe. In R. J. A. Muffels (Ed.), Flexibility and employment security in Europe: Labour markets in transition (pp. 51–77). Cheltenham: Edward Elgar.Google Scholar
  12. Eardley, T. (2000). Working but poor? Low pay and poverty in Australia. The Economic and Labour Relations Review,11(2), 308–338.Google Scholar
  13. Emmenegger, P., Häusermann, S., Palier, B., & Seeleib-Kaiser, M. (Eds.). (2012). The age of dualization: The changing face of inequality in deindustrializing societies. Oxford: Oxford University Press.Google Scholar
  14. Giesecke, J., & Groß, M. (2003). Temporary employment: Chance or risk? European Sociological Review,19(2), 161–177.Google Scholar
  15. Häusermann, S., & Schwander, H. (2012). Varieties of dualization? Labor market segmentation and insider-outsider divides across regimes. In P. Emmenegger, S. Häusermann, B. Palier, & M. Seeleib-Kaiser (Eds.), The age of dualization: The changing face of inequality in deindustrializing societies (pp. 27–51). Oxford: Oxford University Press.Google Scholar
  16. Hayes, C., & Watson, N. (2009). HILDA imputation methods. HILDA Technical Papers Series No 2/09, Melbourne Institute of Applied Economic and Social Research, Melbourne.Google Scholar
  17. Horemans, J. (2016). Polarisation of non-standard employment in Europe: Exploring a missing piece of the inequality puzzle. Social Indicators Research,125(1), 171–189.Google Scholar
  18. Horemans, J., Marx, I., & Nolan, B. (2016). Hanging in, but only just: Part-time employment and in-work poverty throughout the crisis. IZA Journal of European Labor Studies,5, 5.Google Scholar
  19. Hosking, A., & Western, M. (2008). The effects of non-standard employment on work–family conflict. Journal of Sociology,44(1), 5–27.Google Scholar
  20. Jann, B. (2008). The Blinder–Oaxaca decomposition for linear regression models. The Stata Journal,8(4), 453–479.Google Scholar
  21. Kahn, L. (2016). The structure of the permanent job wage premium: Evidence from Europe. Industrial Relations,55(1), 149–178.Google Scholar
  22. Kalleberg, A. L., Rasell, E., Cassirer, N., Reskin, B. F., Hudson, K., Webster, D., et al. (1997). Nonstandard work, substandard jobs: Flexible work arrangements in the U.S. Washington, DC: Economic Policy Institute and Women’s Research & Education Institute.Google Scholar
  23. Kalmijn, M. (1998). Intermarriage and homogamy: Causes, patterns, trends. Annual Review of Sociology,24(1), 395–421.Google Scholar
  24. Keller, B., & Seifert, H. (2009). Atypische Beschäftigungsverhältnisse: Formen, Verbreitung, soziale Folgen. Aus Politik und Zeitgeschichte,27, 40–46.Google Scholar
  25. Lass, I., & Wooden, M. (2017). Measurement, prevalence and the socio-demographic structure of non-standard employment. The Australian case. Paper presented at the IZA Labor Statistics Workshop: The Changing Structure of Work, 29–30 June, Bonn, available at Accessed May 16, 2018.
  26. Lohmann, H. (2009). Welfare states, labour market institutions and the working poor: A comparative analysis of 20 European countries. European Sociological Review,25(4), 489–504.Google Scholar
  27. McVicar, D., Wooden, M., Laß, I., & Fok, Y.-K. (2019). Contingent employment and labour market pathways. Bridge or trap? European Sociological Review,35(1), 98–115.Google Scholar
  28. Mooi-Reci, I., & Dekker, R. (2015). Fixed-term contracts: Short-term blessings or long-term scars? Empirical findings from The Netherlands 1989–2000. British Journal of Industrial Relations,53(1), 112–135.Google Scholar
  29. Neumark, D. (1988). Employers’ discriminatory behavior and the estimation of wage discrimination. Journal of Human Resources,23(3), 279–295.Google Scholar
  30. Oaxaca, R. (1973). Male-female wage differentials in urban labor markets. International Economic Review,14(3), 693–709.Google Scholar
  31. Oaxaca, R., & Ransom, M. R. (1994). On discrimination and the decomposition of wage differentials. Journal of Econometrics,61(1), 5–21.Google Scholar
  32. OECD. (2009). OECD Employment Outlook 2009: Tackling the jobs crisis. Paris: OECD Publishing.Google Scholar
  33. OECD. (2015). In it together: Why less inequality benefits all. Paris: OECD Publishing.Google Scholar
  34. Rodgers, J. R. (2003). Are part-time workers poor? Australian Journal of Labour Economics,6(1), 177–193.Google Scholar
  35. Schäfer, H. (2010). Sprungbrett oder Sackgasse? Entwicklung und Strukturen von flexiblen Erwerbsformen in Deutschland. IW Trends,37(1), 47–63.Google Scholar
  36. Scherer, S. (2009). The social consequences of insecure jobs. Social Indicators Research,93(3), 527–547.Google Scholar
  37. Schwander, H., & Häusermann, S. (2013). Who is in and who is out? A risk-based conceptualization of insiders and outsiders. Journal of European Social Policy,23(3), 248–269.Google Scholar
  38. Shaefer, H. L. (2009). Part-time workers: Some key differences between primary and secondary earners. Monthly Labor Review,132(3), 3–15.Google Scholar
  39. Swami, N. (2017). The effect of non-permanent contractual employment on financial hardship. Melbourne Institute Working Paper No. 20/17. Melbourne: Melbourne Institute of Applied Economic and Social Research.Google Scholar
  40. Tomlinson, M., & Walker, R. (2012). Labour market disadvantage and the experience of recurrent poverty. In P. Emmenegger, S. Häusermann, B. Palier, & M. Seeleib-Kaiser (Eds.), The age of dualization: The changing face of inequality in deindustrializing societies (pp. 52–70). Oxford: Oxford University Press.Google Scholar
  41. van Lancker, W. (2012). The European world of temporary employment. European Societies,14(1), 83–111.Google Scholar
  42. van Lancker, W. (2013). Temporary employment and poverty in the enlarged European Union: An empirical and comparative analysis. In M. Koch & M. Fritz (Eds.), Non-standard employment in Europe: Paradigms, prevalence and policy responses (pp. 190–208). Basingstoke: Palgrave Macmillan.Google Scholar
  43. Watson, I. (2005). Contented workers in inferior jobs? Re-assessing casual employment in Australia. Journal of Industrial Relations,47(4), 371–392.Google Scholar
  44. Watson, N. (2012). Longitudinal and cross-sectional weighting methodology for the HILDA Survey. HILDA Project Technical Paper Series No. 2/12. Melbourne: Melbourne Institute of Applied Economic and Social Research.Google Scholar
  45. Watson, N., & Wooden, M. (2012). The HILDA Survey: A case study in the design and development of a successful household panel study. Longitudinal and Life Course Studies,3(3), 369–381.Google Scholar
  46. Wilkins, R. (2014). Derived income variables in the HILDA Survey data: The HILDA Survey income model. HILDA Project Technical Paper Series No. 1/14. Melbourne: Melbourne Institute of Applied Economic and Social Research.Google Scholar
  47. Wooden, M. (2001). Union wage effects in the presence of enterprise bargaining. Economic Record,77(236), 1–18.Google Scholar

Copyright information

© Springer Nature B.V. 2019

Authors and Affiliations

  1. 1.Melbourne Institute of Applied Economic and Social ResearchUniversity of MelbourneMelbourneAustralia

Personalised recommendations