Do “inferior” jobs always suffer from a wage penalty? Evidence from temporary workers in Cambodia and Pakistan

Abstract

PurposeThis paper aims to investigate the wage gap between temporary and permanent workers in Pakistan and Cambodia.Design/methodology/approachQuantile regression estimator is likely to be the most relevant to the sample.FindingsThe estimates indicate the presence of a temporary employment wage penalty in Pakistan and contrarily a wage premium in Cambodia. Moreover, quantile regression estimates show that wage differentials could greatly vary across the wage distribution. The wage gap is wider at the bottom of the wage distribution in Pakistan, suggesting a sticky floor effect that the penalty of being in temporary jobs could be more severe for disadvantaged workers. By contrast, a glass ceilings effect is found in Cambodia, indicating that the wage premium is small at the bottom and becomes high at the top of the pay ladder.Originality/valueDespite the rise of temporary jobs in the past several decades, the empirical evidence on wage differentials between temporary and permanent workers is extremely limited in developing Asian countries. This paper is the first research work that systematically examines the temporary-permanent wage gap in selected Asian countries, based on their National Labor Force Survey data.