Why Do Firms Use Fixed-Term Contracts?

This paper investigates the reasons why firms use fixed-term contracts.Two distinctive features of these contracts - reduced firing costs and the prohibition of contract rollover - are highlighted. Firms' decision related to temporary contracts - the choice of the contract on offer and contract conversion - are modeled within standard adjustment costs and matching settings. Regression analysis is performed on the stock of fixed-term contracts and the flows of temporary workers to permanent positions. Results from a beta-binomial regression model indicate that screening workers for permanent positions is the single most important reason why firms use this type of contract.Fixed-Term Contracts, Adjustment Costs, Temporary Employment

Spatial and Temporal Aggregation in the Estimation of Labor Demand Functions

The consequences of aggregation, temporal or spatial, for the estimation of demand models are theoretically well-known, but have not been documented empirically with appropriate data before. In this paper we conduct a simple, but instructive, exercise to fill in this gap, using a large quarterly dataset at the establishment-level that is increasingly aggregated up to the 2-digit SIC industry and the yearly frequency. We only obtain sensible results with the quadratic adjustment cost model at the most aggregated levels. Indeed, the results for quadratic adjustment costs confirm that aggregation along both dimensions works to produce more reasonable estimates of the parameters of interest. The fixed adjustment cost model performs remarkably well with quarterly, but also with yearly, data. We argue that is may be one more consequence of the unusually high labor adjustment costs in the Portuguese labor market.

Why Do Firms Use Fixed-Term Contracts?

Temporary forms of employment account for a variable but never trivial share of total employment in both the U.S. and in Europe. In this article we look at how one specific form of temporary employment − employment with fixed-term contracts − fits into employers' hiring policies. We find that human capital variables (schooling, skills and employer-provided training) as measured at the levels of the worker and the workplace are important determinants of the employersâ decisions to hire with fixed-term contracts and to promote temporary workers to permanent positions. Those employers that hire more with fixed-term contracts are also those that are more likely to offer a permanent position to their newly-hired temporary employees. Our results indicate that fixed-term contracts are used as mechanisms for screening workers for permanent positions.fixed-term contracts, adjustment costs, labor demand

Employment Dynamics and the Structure of Labor Adjustment Costs

In this paper we discuss the structure of labor adjustment costs in relationship to the dynamics of job and worker flows. Using high frequency data, we document a previously unsuspected degree of lumpiness in employment adjustment, which is characteristic of non-convex adjustment costs. By means of the statistical analysis of duration data, we relate that lumpiness to the structure of adjustment costs and not to the structure of shocks.

Matching Workers to Jobs in the Fast Lane: the Operation of Fixed-term Contracts

In this paper we look at fixed-term contracts and examine the main features of temporary as opposed to regular employment, keeping the focus on employment careers and wage dynamics of workers employed under fixed-term contracts. Previous work found that fixed-term contracts serve as screening devices for employers. Here it is found that fixed-term contracts serve as search devices for workers, as well. Hence, they can be considered steppingstones to permanent forms of employment. However, if due to a job loss episode, a worker receives at some evolved stage of his or her career a fixed-term contract, there is an indication that both his wage and subsequent employment prospects are severely harmed.

Employment, Pay and Discrimination in the Tourism Industry

Using a large administrative matched employer-employee dataset we analyse the gender wage gap in the Portuguese tourism labour market. As background, employment and pay in the tourism industry is thoroughly characterized. Using the Oaxaca-Blinder decomposition of the gender wage gap, we find that 45 percent of the gap is due to differences in attributes of male and female workers in tourism. Our estimate of the coefficient of discrimination in the tourism industry (8.4 percent) puts it well below the non-tourism average (15.8).tourism, labour market, gender discrimination

Immigrants at New Destinations: How They Fare and Why

Using matched employer-employee data, we identify the determinants of immigrants’ earnings in the Portuguese labor market. Results previously reported for countries with a long tradition of hosting migrants are also valid in a new destination country. Two-thirds of the gap is attributable to match-specific and employer characteristics. Occupational downgrading and segregation into low-wage workplaces are two major causes behind the wage gap.immigrants' earnings, workplace concentration of immigrants, matched employer-employee data

Job and worker flows in high adjustment cost settings

This paper analyses the relationship between the size of adjustment costs and the intensity of labor market flows. I argue that high adjustment costs inhibit adjustment to temporary shocks, leaving adjustment to long-lived shocks unchanged. Worker turnover is also reduced because of the negative impact that adjustment costs have on churning.info:eu-repo/semantics/publishedVersio

Are Older Workers Worthy of Their Pay? An Empirical Investigation of Age-Productivity and Age-Wage Nexuses

Using longitudinal employer-employee data spanning over a 22-year period, we compare age-wage and age-productivity profiles and find that productivity increases until the age range of 50-54, whereas wages peak around the age 40-44. At younger ages, wages increase in line with productivity gains but as prime-age approaches, wage increases lag behind productivity gains. As a result, older workers are, in fact, worthy of their pay, in the sense that their contribution to firm-level productivity exceeds their contribution to the wage bill. On the methodological side, we note that failure to account for the endogenous nature of the regressors in the estimation of the wage and productivity equations biases the results towards a pattern consistent with underpayment followed by overpayment type of policies.aging, productivity, wages

The Timing of Labor Demand

We examine the timing of firms' operations in a formal model of labor demand. Merging a variety of data sets from Portugal from 1995-2004, we describe temporal patterns of firms' demand for labor and estimate production-functions and relative labor-demand equations. The results demonstrate the existence of substitution of employment across times of the day/week and show that legislated penalties for work at irregular hours induce firms to alter their operating schedules. The results suggest a role for such penalties in an unregulated labor market, such as the United States, in which unusually large fractions of work are performed at night and on weekends.J23; J78