Measuring Precarious Employment: A Proposal for Two Indicators of Precarious Employment Based on Set-Theory and Tested with Dutch Labor Market-Data

Scholars claim that precarious employment is rising. The precariously employed earn low wages, have little job- and income security and occupy jobs that can generally be deemed low quality. These employees are at a disproportionally high risk of poverty and are at risk of detrimental psychological effects. Despite the salience of the issue, precarious employment remains an elusive concept and has proven difficult to measure directly. Instead, measurement tends to rely on non-integrated indicators and proxies, thus introducing significant issues concerning the validity of found results. This paper proposes two integrated indicators for specific aspects of precarious employment. Indicator 1 focuses on income insecurity and is constructed using wage, supplementary income and unemployment benefit entitlements. Indicator 2 focuses on job insecurity and is constructed using contract type and unemployment duration. Additionally, to check for the coexistence of job- and income insecurity at the individual level and give a more holistic picture of precarious employment, Indicators 1 and 2 are integrated. First, previous research on precarious employment and job insecurity is reviewed to bolster the indicators’ validity. Second, the indicators are constructed using an approach grounded in crisp-set theory and data from the Dutch “Organisatie Strategisch Arbeidsmartkonderzoek” labor supply panel. Finally, the indicators are tested by assessing precarious employment over time, by educational level, sector and immigrant status.