The Effect of Non-Permanent Contractual Employment on Financial Hardship

Abstract

This study uses longitudinal data from the Household, Income and Labour Dynamics in Australia (HILDA) survey to examine the difference in the experience of financial hardship between permanent and two forms of non-permanent employment:-fixed-term and casual employment, separately for men and women. It estimates multivariate ordered logit fixed-effects models that account for time-invariant unobserved heterogeneity, common macroeconomic shocks and a rich set of individual level characteristics, and finds that for both men and women, compared to permanent employment, casual employment is associated with increased financial hardship. Fixed-term employment is not associated with increased financial hardship for either men or women. For men, the strong positive association between casual employment and financial hardship is largely explained by fewer hours of work and a higher vulnerability to employment shocks (job loss and job change). For women, particularly those with caring responsibilities, working fewer hours and experiencing employment shocks (job loss and job change) explain some of the association between casual employment and financial hardship, but even after allowing for these factors casual employment per se continues to have a strong positive association with the experience of financial hardship.