The (long) run out of unemployment: are temporary jobs the shortest way?

A higher job creation is a common result by many theoretical approaches trying to model marginal labor market reforms. In the framework proposed by Berton and Garibaldi [2006], in particular, the equilibrium arrival rate of temporary job offers is expected to be higher than the arrival rate of permanent ones. In this paper I use a sample of prime aged male workers from WHIP in a competing risks framework in order to compare the duration of unemployment spells terminated by jobs that only di¤er in their formal duration. I fnd that the arrival rate of fixed term jobs is actually larger than the arrival rate of permanent ones; this result is robust to the main sources of unobserved heterogeneity. However, the average duration of unemployment in Italy is still very high and the liberalization of flexible contracts as a policy to reduce it did not completely solve the problem.temporary jobs, unemployment duration, competing risks.

Are Temporary Jobs a Port of Entry into Permanent Employment? Evidence from Matched Employer-Employee Data

Are temporary jobs a port of entry into permanent employment? In this paper we argue that the answer crucially depends on the type of temporary contracts being considered, as the different contracts observed in practice are typically characterized by varying combinations of training, tax-incentives and EPL provisions. We base our empirical evidence on a longitudinal sample of labour market entrants in Italy, a country where a large number of temporary contracts coexist with a relatively high employment protection for standard employees. We estimate dynamic multinomial logit models with fixed effects, to allow for non-random sorting of workers into the different types of contracts. We show that the transition to permanent employment is more likely for individuals holding any type of temporary contracts than for the unemployed, thus broadly confirming the existence of port-of-entry effects. Yet, not all temporary contracts are the same: training contracts are the best port of entry, while freelance contracts are the worst. We also show that temporary contracts are generally a port-of-entry into a permanent position within the same employer, but not across firms, implying that little general-purpose training is gained while on temporary jobs. Moreover, the time needed for an internal transformation from a temporary to a permanent position appears rather long, suggesting that firms are likely to use (a sequence of) temporary contracts as a cost-reduction strategy, rather than as a screening device for newly hired workers.temporary jobs, port of entry, matched employer-employee data, dynamic multinomial logit models, state dependence, fixed effects

Temporary jobs: Port of entry, Trap, or just Unobserved Heterogeneity?

We use a 1998 - 2004 sample from WHIP in order to study the labor market transitions of young entrants. We consider seven labor market tates: permanent and temporary employment, apprenticeship, training pogrammes, self employment, quasi subordinate jobs and unemployment. After controlling for individual ?xed e¤ects in a dynamic multinomial logit framework, we ?nd that heterogeneity partially explains workers' sorting among the contracts. State dependence exists in all the labor market states, but CFLs, apprenticeship and temporary jobs also represent a port of entry towards permanent employment. Length: 22 pagestemporary jobs, port of entry, state dependence