Jeff Frank

Temporary Jobs: Stepping Stones or Dead Ends?

In Britain about 7% of male employees and 10% of female employees are in temporary jobs. In contrast to much of continental Europe, this proportion has been relatively stable over the 1990s. Using data from the British Household Panel Survey, we find that temporary workers report lower levels of job satisfaction, receive less work-related training, and are less well-paid than their counterparts in permanent employment. However, there is evidence that fixed-term contracts are a stepping stone to permanent work. Women (but not men) who start in fixed-term employment and move to permanent jobs fully catch up to those who start in permanent jobs.

A sticky floors model of promotion, pay, and gender

Abstract According to raw data from the British Household Panel Survey, full-time women are more likely than men to be promoted. Controlling for observed and unobserved individual heterogeneity, we find that women are promoted at roughly the same rate as men, but may receive smaller wage increases consequent upon promotion. To help explain these phenomena, we construct a new “sticky floors” model of pay and promotion. In our model, women are just as likely as men to be promoted but find themselves stuck at the bottom of the wage scale for the new grade.

Earnings, Productivity, and Performance-Related Pay

Jobs with performance‐related pay (PRP) attract workers of higher ability and induce workers to provide greater effort. We construct an integrated model of effort and sorting that clarifies the distinction between observable and unobservable ability and the relationship between earnings and productivity. Predictions are tested against data from the British Household Panel Survey (BHPS). The PRP raises wages by 9% for men and 6% for women. Theoretical calculations show that these estimated earnings differentials represent average productivity differentials net of monitoring costs at the marginal firm using PRP but not of the disutility of additional effort expended by workers.

Symposium on Temporary Work Introduction

European countries have adopted widely varying policies concerning employment protection. In economies where permanent workers have high levels of employ ment protection, temporary contracts can provide a mechanism enhancing labour market flexibility, since firms can adjust their workforces by varying the number of temporary workers. In Spain and, to a lesser extent, France countries charac terised by high levels of employment protection there has been a dramatic growth in temporary jobs over the last 15 years. The experience of Britain pro vides a contrast, since weak employment protection has been associated with a low and stable percentage of the workforce in temporary jobs. Recently, EU policy makers have turned their attention to temporary jobs, and required the extension of employment protection to temporary workers. This symposium gathers together comparative evidence on the nature and evolution of temporary work in countries with different regulatory frameworks and different labour market conditions. Some of the evidence is microeconomic, providing information on the extent to which temporary jobs are ‘good’ or ‘bad’ in terms of worker compensation and career possibilities. Other evidence is macro economic, and sheds light both on forces that may explain the rise in temporary work and on the consequences of an increased prevalence of temporary jobs. The four papers in the symposium examine temporary work in four EU countries: Britain, France, Spain and Sweden. The reason for looking across countries is that the differing institutions in each country notably the degree of employment protection allow us to examine different features of temporary work. Britain provides the benchmark case where weak employment protection means that the outcome follows an essentially unregulated market. Sweden and France have maintained employment protection at about the average levels in Europe for the past fifteen years. Both, however, show sharp rises in temporary work over the period, although as discussed in the papers possibly for very different reasons. Spain is an interesting extreme example where temporary work is far higher than

Ethnic and Other Minority Representation in UK Academic Economics

Using a survey questionnaire of academic economists in the United Kingdom, we examine the representation of ethnic and other minorities. We find that nearly 12% of UK-employed academic economists are of ethnic minority origin. However, only 1% of the sample are UK-born ethnic minority. Controlling for individual and workplace characteristics, there is no significant ethnic minority effect on academic rank. However, there is a significant negative earnings effect. Further, 41% of ethnic minority economists feel that they have suffered workplace discrimination.

TRADE UNION EFFICIENCY AND OVEREMPLOYMENT WITH SENIORITY WAGE SCALES

inefficient unemployment of union members depends upon the inability of the union to bargain over employment as well as wages. The issue of union membership limitations has received less attention, as seen in the survey by Oswald (I 983). Grossman (i983) considers endogenous membership size, with mixed efficiency results, but he imposes a number of severe restrictions on allowable contracts. In the current paper we examine the issue of union membership size under very general contracts where unions negotiate over wage rates, employment levels and compensation payments to laid-off workers, and further can negotiate differential treatment of seniority groups. These general contracts represent a useful benchmark case, recognising that the results will change as various limitations on the contract are imposed. The treatment of seniority is crucial, and we model this by an overlapping-generations approach. Continuing workers at the firm negotiate the contract to be applicable to the following period. New hires over that period (in the number stipulated in the contract) then gain seniority and negotiate the contract for the period after. The formulation of the problem, with the exception of the treatment of new hirings, is similar to that in the implicit contracting literature, and many of the results will be familiar. Unemployment of union members only occurs when the marginal value product of labour fails below the opportunity cost (leisure value,

Monopolistic Competition, Risk Aversion, and Equilibrium Recessions

This paper considers a model with monopolistic competition and multiple equilibria, rankable by output, employment, and the Pareto criterion. While papers in the literature assume a linear production technology and derive a continuum of equilibria, we assume a standard diminishing returns production function and find a finite set of equilibria. Our new feature is the assumption that firms behave in a risk-averse manner. A low-level equilibrium is sustainable because firms, at the low profits level associated with the equilibrium, become extremely cautious in their employment decisions.

Trade unions and seniority employment rules

Abstract Some, but not all, trade union and insider-outsider models assume that a seniority employment rule is used. We investigate when firm and union members gain from such a rule and the consequences of their adopting one. Generally, providing a seniority wage scale is also used, they gain if union membership is not too large relative to demand and union bargaining power not too great. Moreover, when outsiders are hired under a seniority employment rule, employment is at the competitive level. These results might explain why bargaining over employment is relatively uncommon and typically occurs only in industries with declining employment.

Gender and Work-Life Flexibility in the Labour Market

A friend had a job playing in The Mousetrap in London. It was a one-year contract (with no chance of renewal), involved 8 shows a week (6 evenings and 2 matinees), and contained a gratuity clause where he would be penalised £50 (from the end-of-contract gratuity) for every show he missed, even if due to illness. This contract reflects the sort of labour market flexibility desired by some employers, with no employment protection, with effectively no sick pay, and with unsocial hours. Employers would argue that this flexibility serves a clear functional purpose. The unsocial hours are necessary since not many people would go to see a performance at 9 in the morning. The one year limit on employment is necessary since a regular turnover of cast is important to keep the show fresh. Absences — even due to illness — need to be discouraged since it is undesirable to have understudies rather than cast members perform. Employers would also argue that workers receive the appropriate compensation for this flexibility. While this particular contract can be extremely attractive to some individuals — and indeed there is no difficulty in recruiting new cast members — it would also be extremely inconvenient to others. In a competitive labour market, the rate of pay would contain ‘compensating differentials’ — by which is meant that wages must be higher if a job is unattractive to compensate for the disutility of working there and lower if a job is attractive.

Heterogeneous labor and implicit contracts

Abstract The paper examines the role of layoffs under implicit contracts, when labor is heterogeneous. Wage-adjustment strategies are preferable in that employment is allocated more efficiently. The impossibility of effectively commiting to employment levels may reverse the ordering.