Are Estimates of Non-Standard Employment Wage Penalties Robust to Different Wage Measures? The Case of Zero-hour Contracts in the UK

Abstract

Evidence suggests that non-standard jobs are associated with wage penalties. Yet, these jobs possess a range of undesirable characteristics that should generate compensating wage differentials. This evidence relies on derived wage variables, prone to measurement error likely to be correlated with employment contract. Stated-rate hourly wage questions are not subjected to the same measurement issues. Using zero-hour contracts in the UK, we show that there is no conditional average ZHC wage penalty once stated-rate hourly wage measures are used. We discuss implications for policy.