Early career consequences of temporary employment in Germany and the UK

Abstract

This article investigates the effects of temporary employment at labour market entry on subsequent individual careers, drawing on data from the British Household Panel Study (BHPS) and the German Socio-Economic Panel (GSOEP) from the period 1991 to 2007. The results show that German temporarily employed entrants suffer from higher initial wage penalties and risks of temporary employment cycles but that all differences compared to entrants with permanent contracts diminish after five years. The integration scenario works more effectively in the UK, where disadvantages are less pronounced and employment losses are primarily related to further education. Moreover, these tendencies vary by education groups and gender. Disadvantages of initial temporary employment are weaker for women in Germany, while gender differences in the UK apparently have less impact. Across borders, temporary contracts are associated with greater initial but vanishing wage penalties and temporary employment cycles for tertiary graduates.