The welfare effect of temporary work: a Dutch case study using LISS panel-data

Abstract

Both policy makers and academics are increasingly concerned with the position of the rapidly increasing temporary work force and its effect on worker’s welfare. The literature on this relation is however inconclusive and inconsistent. This paper therefore researches the relationship between temporary work and job satisfaction. Given the specific Dutch labour market context it is hypothesised that temporary work has a negative effect on job satisfaction which is driven by job insecurity. From the breadwinner model it is furthermore expected that the negative effects of temporary work and job insecurity on job satisfaction would be experienced more strongly for men. These hypotheses are tested using Dutch LISS panel data for the period 2008-2015. Temporary work is found to have an insignificant effect on job satisfaction for both men and women when controlled for individual time invariant heterogeneity and job insecurity. Job insecurity, in contrast, is found to have a significantly negative effect on job satisfaction. There is no evidence that men and women or permanent and temporary workers value job insecurity differently. This paper hence concludes that it is not the contract type, but the level of job insecurity that determines the welfare effect of temporary contracts. For policy makers this implies that they should focus on mitigating the effect of job insecurity rather than limiting the number of flexible contracts.