Contract Permanence vs. Daily Wage Trade-Off
RCTClinical Trial
In low-income urban labor markets, high-paying employment opportunities are often concentrated in short-term project-based roles rather than permanent, stable positions. Job seekers face a structural trade-off between maximizing short-term daily earnings and securing long-term employment stability.
Picture this
Earning higher daily wages in short-term project roles is like working as a high-paid freelance contractor rather than a lower-paid permanent office employee. The worker receives higher immediate daily compensation, but the work is organized around short contracts that require frequent re-entry into the job market.
What the evidence says
Acquiring short-term work experience increased average daily wages by $3.83 (an 80% wage increase) but resulted in a negative coefficient (-0.386, p > 0.10) on the pay frequency permanence index, indicating that wage gains were concentrated in less permanent, daily-paid positions.
- Who was studied
- N = 227 male job seekers with secondary education in Lilongwe, Malawi, tracked over an 8-month post-intervention period.
- How
- Instrumental variables (IV) estimation utilizing randomly assigned probabilistic job guarantees to evaluate post-intervention contract duration proxies (pay frequency unit: 1=daily, 2=weekly, 3=fortnightly, 4=monthly) and daily earnings.
What to do
Evaluate youth employment interventions using both daily wage metrics and contract duration indicators to measure long-term job stability alongside wage growth.
From the source
"The negative coefficient suggests that individuals induced to receive work experience through the experiment work in less permanent positions."
Employment Exposure: Employment and Wage Effects in Urban Malawi