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Workers and Firms Sorting into Temporary Jobs

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Author Info

  • Fabio Berton
  • Pietro Garibladi

Abstract

The liberalization of fixed term contracts in Europe has led to a two tier regime, with a growing share of jobs covered by temporary contracts. The paper proposes a matching model with direct search in which temporary and permanent jobs coexist in a long run equilibrium. When temporary contracts are allowed, firms are willing to open permanent jobs in as much as their job filling rate is faster than that of temporary jobs. From the labour demand standpoint, a simple trade-off emerges between an ex-ante job filling rate and ex-post flexible dismissal rate. From the labor supply standpoint, a trade-off emerges between an ex-ante lower job finding rate and ex-post larger retention rate. The model features a natural sorting of firms and workers into permanent and temporary jobs. It is also consistent with the observation that workers hired on a permanent contract receive more training. The paper shows that the transition from a rigid to a two a tier regime system is always associated with a transitory fall in unemployment.

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Bibliographic Info

Paper provided by LABORatorio R. Revelli, Centre for Employment Studies in its series LABORatorio R. Revelli Working Papers Series with number 51.

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Length: 30 pages
Date of creation: 2006
Date of revision:
Handle: RePEc:cca:wplabo:51

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Related research

Keywords: Matching Models; Temporary Jobs.;

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Cited by:
  1. Lia Pacelli & Silvia Pasqua & Claudia Villosio, 2008. "What does the stork bring to women's working career?," LABORatorio R. Revelli Working Papers Series 79, LABORatorio R. Revelli, Centre for Employment Studies.
  2. Fabio Berton & Francesco Devicienti & Lia Pacelli, 2009. "Are Temporary Jobs a Port of Entry into Permanent Employment? Evidence from Matched Employer-Employee Data," Working papers 6, Former Department of Economics and Public Finance "G. Prato", University of Torino.
  3. Tealdi, Cristina, 2011. "How do employment contract reforms affect welfare? Theory and evidence," MPRA Paper 33573, University Library of Munich, Germany.
  4. Domenico Tabasso, 2009. "Temporary Contracts and Monopsony Power in the UK Labour Market," Economics Discussion Papers 675, University of Essex, Department of Economics.
  5. Cahuc, Pierre & Charlot, Olivier & Malherbet, Franck, 2012. "Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover," IZA Discussion Papers 6365, Institute for the Study of Labor (IZA).
  6. Charlot Olivier & Malherbet Franck, 2010. "Education and the welfare gains from employment protection," THEMA Working Papers 2010-04, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
  7. Charlot, Olivier & Malherbet, Franck, 2013. "Education and employment protection," Labour Economics, Elsevier, vol. 20(C), pages 3-23.
  8. Tealdi, Cristina, 2011. "Typical and atypical employment contracts: the case of Italy," MPRA Paper 39456, University Library of Munich, Germany.
  9. Fabio Berton & Francesco Devicienti & Lia Pacelli, 2011. "Are temporary jobs a port of entry into permanent employment?: Evidence from matched employer-employee," International Journal of Manpower, Emerald Group Publishing, vol. 32(8), pages 879-899, November.
  10. Dräger, Vanessa & Marx, Paul, 2012. "Do Firms Demand Temporary Workers When They Face Workload Fluctuation? Cross-Country Firm-Level Evidence on the Conditioning Effect of Employment Protection," IZA Discussion Papers 6894, Institute for the Study of Labor (IZA).
  11. Fabio Berton & Francesco Devicienti & Lia Pacelli, 2007. "Temporary jobs: Port of entry, Trap, or just Unobserved Heterogeneity?," LABORatorio R. Revelli Working Papers Series 68, LABORatorio R. Revelli, Centre for Employment Studies.
  12. Fabio Berton, 2008. "The (long) run out of unemployment: are temporary jobs the shortest way?," LABORatorio R. Revelli Working Papers Series 76, LABORatorio R. Revelli, Centre for Employment Studies.
  13. Marco Di Cintio & Emanuele Grassi, 2014. "Wage Incentive Profiles in Dual Labor Markets," Working Papers 2014.22, Fondazione Eni Enrico Mattei.

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