How Important is the Type of Working Contract for Job Satisfaction of Agency Workers?

Abstract

Previous research has found that agency workers are less satisfied with their job than regular workers on a permanent contract. All these studies have in common that they treat agency workers as a homogeneous group; that is, they did not consider the contract type agency workers hold. This paper analyzes whether differences in job satisfaction can be explained by the contract type using data from the German Socio-Economic Panel. The analysis leads to three main results. First, differences in job satisfaction cannot be explained by the contract type. Second, agency workers on a permanent contract are significantly less satisfied with their job than regular workers on the same contract. Third, agency workers on a fixed-term contract do not differ in reported job satisfaction from regular workers on both fixed-term and permanent contracts. These findings give rise to the hypothesis that as a policy instrument agency employment appears to be well-suited for short-term periods, but it should be prevented that workers are persistently employed in such a work arrangement.