Casual employment and long-term wage outcomes

Abstract

Temporary and other forms of non-standard employment are an important feature of modern labour markets. Yet, relatively little is known about how much and under what circumstances such employment arrangements impact on long-term wage outcomes. Using longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) Survey spanning the period 2001 to 2014, we examine how employment status earlier in a working career is associated with subsequent wage dynamics. Particular attention is paid to how wage trajectories vary with gender and age. Estimates from a series of panel data models of real hourly wages reveal that among men there is an average long-run penalty from casual employment of about 10%, suggestive of scarring effects. Nevertheless, for men in most age groups this wage penalty does eventually begin to shrink. Among prime-age men, however, there is no evidence of catch-up; indeed, for this group the wage gap widens over time. Among women the estimated average long-run wage penalty associated with casual employment is both much smaller and less robust. We argue that expectations and norms about ‘ideal careers’ may be an important explanatory factor underlying the larger casual employment wage penalty for men.