Tanja Buch, Carola Burkert, Stefan Hell, Annekatrin Niebuhr
May 19, 2016
This paper considers the effects of temporary work on labor market entry and the subsequent careers of graduates of the vocational training system in Germany (VTS). Departing from Spence’s signaling theory we conjecture that low schooling and bad grades in the final VTS exams contribute to early temping. Early temping is in turn expected to have negative long-term career consequences. To test these assumptions we use unique data on several cohorts of German VTS graduates which provides detailed information on schooling and the quality of vocational skills, including final VTS grades. The results of multivariate regression analyses (probit models) show that graduates with a lower level of education and graduates with poor grades are highly likely to have to turn to temporary employment after completing their vocational training. VTS graduates who enter the labor market via temporary employment are also found to suffer from low wages and repeated spells of unemployment. They are also disproportionately prone to forced occupational mobility.We conclude that graduates with low productivity in particular have to rely on temporary work to make the transition from vocational training to the labor market.