Earnings, Education, and Fixed‐Term Contracts

We explore the relationship between earnings, education, and fixed‐term contracts using data from the 1997 British Social Attitudes Survey . We find that the log hourly wage of workers employed under such contracts is approximately 13% lower than that of their ‘permanent’ counterparts, even after controlling for a plethora of personal and job characteristics. Standard decompositions indicate that the vast majority of this differential (more than 70%) is attributable to price effects, which may reflect discrimination on the part of the employer. Such findings may, therefore, suggest that employment protection is appropriate for individuals employed under fixed‐term contracts.