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The Determinants of Contract Length in Temporary Help Employment

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  • Tommaso Nannicini

Abstract

. This paper investigates the determinants of labor contract duration in the case of temporary help employment. A simple theoretical model is developed, in order to depict the choice of contract length made by a firm that recruits temporary agency workers to deal with activity peaks. Assuming that the hiring of a new worker is associated with selection and training costs, longer contracts have an option value in face of a greater persistence of positive shocks. The model has two testable implications. First, the degree of serial correlation in market demand positively affects contract length. Second, the shortage of alternative employment opportunities negatively affects contract length. Using data on Italian temporary agency workers, both implications are confirmed by the econometric analysis.

Suggested Citation

  • Tommaso Nannicini, 2006. "The Determinants of Contract Length in Temporary Help Employment," LABOUR, CEIS, vol. 20(3), pages 453-474, September.
    • Handle: RePEc:bla:labour:v:20:y:2006:i:3:p:453-474
    DOI: 10.1111/j.1467-9914.2006.00350.x
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    References listed on IDEAS

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    1. Marcello Estevao & Saul Lach, 1999. "The evolution of the demand for temporary help supply employment in the United States," Finance and Economics Discussion Series 1999-58, Board of Governors of the Federal Reserve System (U.S.).
    2. Miguel A. Malo & Fernando Munoz-Bullón, "undated". "Temporary help agencies and the labour market biography: A sequences-oriented approach," Studies on the Spanish Economy 132, FEDEA.
    3. Michael Kvasnicka, 2005. "Does Temporary Agency Work Provide a Stepping Stone to Regular Employment?," Labor and Demography 0510005, University Library of Munich, Germany.
    4. Lewis M. Segal & Daniel G. Sullivan, 1997. "Temporary services employment durations: evidence from state UI data," Working Paper Series, Macroeconomic Issues WP-97-23, Federal Reserve Bank of Chicago.
    5. Tommaso NANNICINI, 2004. "The Take-off of Temporary Employment in the Italian Labor Market," Economics Working Papers ECO2004/09, European University Institute.
    6. Susan Houseman & Machiko Osawa (ed.), 2003. "Nonstandard Work in Developed Economies: Causes and Consequences," Books from Upjohn Press, W.E. Upjohn Institute for Employment Research, number nwde, August.
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    Cited by:

    1. Florian Baumann & Mario Mechtel & Nikolai Stähler, 2011. "Employment Protection and Temporary Work Agencies," LABOUR, CEIS, vol. 25(3), pages 308-329, September.
    2. Leandro Elia, 2010. "Temporary/Permanent Workers' Wage Gap: A Brand‐new Form of Wage Inequality?," LABOUR, CEIS, vol. 24(2), pages 178-200, June.

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