Fixed-term contracts: Chance or risk?

The paper investigates whether increased labor market flexibility leads to a reinforcement of the existing segmentation of the labor market or whether it is dismantling the barriers in the labor market. Using spell data (employment and unemployment periods) from the German Socio-economic Panel (GSOEP, time period: 1984-1999) both determinants of fixed-term contracts and their consequences (renewed temporary employment, unemployment) are investigated with the help of random-effects logic-models. The results show that respondents' characteristics (amount and type of human capital, formerly experienced periods of unemployment), structural variables (branch, firm size), and occupational characteristics (position, marginal employment) are influencing the risk of getting a temporary job, Furthermore it becomes evident that fixed-term contracts are increasing the risk of getting a temporary job again or of becoming unemployed after termination of the temporary job, These results show that fixed-term contracts above all are part of the secondary labor market, and that they especially have negative consequences for the employees in this segment. On the other hand fixed-term contracts can be seen as a chance in the way Thai they offer at least an alternative to unemployment. Hence, a too narrow evaluation of temporary employment would be too simplistic.