FLEXIBLE CONTRACTS AND SUBJECTIVE WELL-BEING

Authors

  • COLIN P. GREEN,

    1. Green: Department of Economics, Lancaster University, Lancaster, LA1 4YT, UK. Phone (44) 1524 594667, E-mail c.p.green@lancaster.ac.uk
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  • JOHN S. HEYWOOD

    1. Heywood: Department of Economics, University of Wisconsin-Milwaukee, P.O. Box 413, Milwaukee, WI 53201. Phone 1-414-229-4310, Fax 1-414-229-5915, E-mail heywood@uwm.edu
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    • We would like to thank Uwe Jirjahn and seminar participants at the University of Hanover, Lingnan University, and the University of Trier for helpful comments on earlier drafts. C.G. is grateful to the Bowland Charitable Trust for their ongoing financial support.


Abstract

Theory suggests that when workers choose between permanent and flexible contracts, their utility should tend to equalize across contract types. New estimates of job satisfaction show the critical role played by unmeasured worker heterogeneity. They reveal that flexible contracts are a strong negative determinant of satisfaction with job security but are often a positive determinant of other dimensions of job satisfaction. As a consequence, flexible contracts have either a weak negative influence or no influence on overall job satisfaction. Moreover, flexible contracts generally have no impact on overall life satisfaction of the employed. These results appear broadly consistent with the presence of equalizing differences. (JEL J28, J41)

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