Measuring temporary employment: Do survey or register data tell the truth?

One of the main variables in the Dutch Labour Force Survey is the variable measuring whether a respondent has a permanent or a temporary job. The aim of our study is to determine the measurement error in this variable by matching the information obtained by the longitudinal part of this survey with unique register data from the Dutch Institute for Employee Insurance. Contrary to previous approaches confronting such datasets, we take into account that also register data are not error-free and that measurement error in these data is likely to be correlated over time. More specifically, we propose the estimation of the measurement error in these two sources using an extended hidden Markov model with two observed indicators for the type of contract. Our results indicate that none of the two sources should be considered as error-free. For both indicators, we find that workers in temporary contracts are often misclassified as having a permanent contract. Particularly for the register data, we find that measurement errors are strongly autocorrelated, as, if made, they tend to repeat themselves. In contrast, when the register is correct, the probability of an error at the next time period is almost zero. Finally, we find that temporary contracts are more widespread than the Labour Force Survey suggests, while transition rates between temporary to permanent contracts are much less common than both datasets suggest.
Keywords: Temporary contracts; Measurement error; Hidden Markov model; Register data.