Atypical employment over the life cycle

Published date21 April 2020
Date21 April 2020
AuthorRonald Bachmann,Rahel Felder,Marcus Tamm
Atypical employment over the
life cycle
Ronald Bachmann and Rahel Felder
RWI - Leibniz-Institut f
ur Wirtschaftsforschung, Essen, Germany, and
Marcus Tamm
Hochschule der Bundesagentur f
ur Arbeit (HdBA), Mannheim, Germany
Purpose This paper analyses how the employment histories of cohorts born after World War II in Germany
have changed. A specific focus is on the role of atypical employment in this context.
Design/methodology/approach This paper uses data from the adult cohort of the National Educational
Panel Study and presents descriptive evidence on employment patterns for different cohorts. In addition, a
sequence analysis of employment trajectories illustrates key aspects related to the opportunities and risks of
atypical employment.
Findings Younger cohorts are characterised by acquiring more education, by entering into employment at a
higher age and by experiencing atypical employment more often. The latter is associated with much higher
employment of women for younger cohorts. The sequence analysis reveals that the proportion of individuals
whose entry into the labour market is almost exclusively characterised by atypical employment rises
significantly across the cohorts. Moreover, a substantial part of the increase in atypical employment is due to
the increased participation of women, with part-time jobs or mini-jobs playing an important role in re-entering
the labour market after career breaks.
Originality/value The most important contribution of this article to the existing literature lies in the life
course perspective taken for different birth cohorts. The findings are of great interest to the general debate
about the success of the German labour market in recent decades and its implications for individual labour-
market histories, but also about rising income inequality at about the same time.
Keywords Atypical employment, Regular employment, Cohort differences, Life cycle analysis, Sequence
Paper type Research paper
1. Atypical employment in Germany: extent and importance
The recent thriving employment performance of the German labour market and its reasons
have attracted considerable attention by policymakers and academics alike (Dustmann et al.,
2014;Carrillo-Tudela et al., 2018). The increase of employment rates, however, went together
with a considerable rise in wage inequality during the last decades (Card et al., 2013). Both the
growth of employment and the rise in wage inequality are linked to the growing importance
of atypical employment [1] for the German labour market. On the one hand, atypical
employment has been an important driver of overall employment growth in Germany
(Eichhorst, 2015). The share of atypical employment in total employment rose from 12.8% in
1991 to 20.8% in 2015 (Statistisches Bundesamt, 2016). On the other hand, atypical
employment is associated with a higher risk of unemployment and significant disadvantages
in pay, and has contributed to rising wage inequality in Germany (Biewen et al., 2018;
Brehmer and Seifert, 2008;Gebel, 2010;Giesecke and Groß, 2002;Kvasnicka and Werwatz,
2002;Paul, 2016;RWI, 2016).
JEL Classification J21, J42, J81
This article is partly based on a research report for the Ministry of Labour and Social Affaires
(BMAS) for the preparation of the 5th Poverty and Wealth Report of the Federal Government (RWI 2016)
and is a translated and streamlined version of Bachmann et al. (2017). We acknowledge funding from the
BMAS for the original research report. Declaration of interest: none.
The current issue and full text archive of this journal is available on Emerald Insight at:
Received 13 August 2019
Revised 27 January 2020
Accepted 27 February 2020
Evidence-based HRM: a Global
Forum for Empirical Scholarship
Vol. 8 No. 2, 2020
pp. 195-213
© Emerald Publishing Limited
The welfare consequences of atypical employment depend crucially on its impact both on
the labour market as a whole and at the individual level. We therefore examine the following
research questions: (1) How has labour-market participation evolved over the life cycle in
recent decades? (2) What is the role of atypical employment, that is, to what extent do workers
pursue atypical employment over the course of their working lives and how have the
corresponding employment profiles by age changed over time? (3) Which types of
employment trajectories can be identified at the individual level?
The answer to the first question is the backbone for the following analyses. The
importance of atypical employment in recent times can only be assessed if it is clear how the
labour force participation developed over the life cycle when atypical employment played a
smaller role than it does nowadays. Hence, our main empirical approach is to provide
descriptive evidence on the life-cycle profile of different birth cohorts in this context (see also
Section 2). This approach does not allow us to establish a counterfactual situation in the sense
of a causal analysis, and we thus cannot interpret it in the sense of a causal cohort effect.
However, we are able to provide an encompassing portrait for different birth cohorts, which
also makes it possible to make a comparison with the current situation.
The answerto the second question illustratesthe importanceof atypical employment for the
labour market as a whole, and which subgroups of the population (by age and gender) are
affected most. Combined with the first researchquestion, we can relate general labour-market
participationto atypical employment,both over the lifecycle and over time. Thisis particularly
important for understanding the strong increasein female participation over time.
To answer the thirdquestion, we focus on individual employment trajectories and typical
sequences of different employment forms (regular employment, atypical employment,
unemployment, etc.) over the life cycle. Since periods of employment may have long-term
effects on an individuals future employment trajectory, individual trajectories may deviate
greatly from average behaviour. Atypical employment may therefore only be concentrated
amongst certain groups of workers. We analyse these heterogeneities by depicting typical
employmenttrajectories. This also allowsus to make statementsabout the role and motives of
atypical employment at specific points in individualsemployment histories. Atypical
employment may, for example, facilitate access to the labour market at the first entry into
the labour market or after career breaks, be a stepping stone to regular employment or
representthe beginning of a permanentperiod of such employment.Which mechanism applies
is controversially discussed in the literature and dependson the type of atypical employment.
According to the Bundesagentur f
ur Arbeit (2013), temporary agency work facilitates the
accessto the labour market for unemployedindividuals. However, likefixed-term employment,
it is associatedwith lock-in effects(Kv asnicka, 2009;Brehmer and Seifert,2008). Similar lock-in
effects areobserved in part-time employmentand marginal employment (Brehmerand Seifert,
2008), althoughthis is largely at the request of employees in order to better combine personal
and family obligations with work or to gradually retire (RWI, 2013;Wolf, 2010).
Our analyses provide important implications for economic policy. For example, if
involvement in atypical types of employment at early career stages is accompanied by a
significantly reduced probability of ever achieving a stable full-time employment
relationship, regulating atypical employment more strictly will be justified. Considering
distributional aspects, if the increase in atypical employment is concentrated on relatively
few people throughout their whole working lives, an economic policy response may be
warranted. This will not be the case if the increase is due to short periods of atypical
employment for relatively many people.
We use a data set that links the survey data of the National Educational Panel Study
(NEPS) with administrative data (see Section 2) to answer the research questions. This allows
us to study employment over the life cycle of individual workers. Hence, we can illustrate time
spent in atypical employment throughout labour-market careers. Furthermore, we observe a

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