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Fixed-Term Contracts and the Duration Distribution of Unemployment

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  • Maia Güell

Abstract

In the mid-1980s, many European countries introduced fixed-term contracts. Since then their labor markets have become more dynamic. This paper studies the implications of such reforms for the duration distribution of unemployment, with particular emphasis on the changes in the duration dependence. I estimate a parametric duration model using cross-sectional data drawn from the Spanish Labor Force Survey from 1980 to 1994 to analyze the chances of leaving unemployment before and after the introduction of fixed-term contracts. I find that duration dependence has increased since such reform. Semi-parametric estimation of the model also shows that for long spells, the probability of leaving unemployment has decreased since such reform.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0505.

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Date of creation: May 2001
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Handle: RePEc:cep:cepdps:dp0505

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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Keywords: cross-sectional data; duration model; turnover;

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  1. Gerard J. van den Berg & Bas van der Klaauw, 1998. "Combining Micro and Macro Unemployment Duration Data," Tinbergen Institute Discussion Papers 98-098/3, Tinbergen Institute.
  2. Stephen Machin & Alan Manning, 1998. "The Causes and Consequences of Long-Term Unemployment in Europe," CEP Discussion Papers dp0400, Centre for Economic Performance, LSE.
  3. Alfonso Alba-Ramirez, 1999. "Explaining the transitions out of unemployment in Spain: the effect of unemployment insurance," Applied Economics, Taylor & Francis Journals, Taylor & Francis Journals, vol. 31(2), pages 183-193.
  4. Maia Güell, 2003. "Fixed-term Contracts and Unemployment: an Efficiency Wage Analysis," Working Papers 18, Barcelona Graduate School of Economics.
  5. Layard, Richard & Nickell, Stephen & Jackman, Richard, 1991. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, Oxford University Press, number 9780198284345, October.
  6. Blanchard, O.J. & Diamond, P., 1990. "Ranking, Unemployment Duration, And Wages," Working papers 546, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Victor Aguirregabiria & Cesar Alonso-Borrego, 2014. "Labor Contracts And Flexibility: Evidence From A Labor Market Reform In Spain," Economic Inquiry, Western Economic Association International, vol. 52(2), pages 930-957, 04.
  8. Serrano, Carlos Garcia, 1998. "Worker Turnover and Job Reallocation: The Role of Fixed-Term Contracts," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 709-25, October.
  9. Wadsworth, J., 1989. "Unemployment Benefits And Search Effort In The Uk Labour Market," Papers, London School of Economics - Centre for Labour Economics 333, London School of Economics - Centre for Labour Economics.
  10. Arellano, Manuel & Bentolila, Samuel & Bover, Olympia, 1998. "Unemployment Duration, Benefit Duration and the Business Cycle," CEPR Discussion Papers 1840, C.E.P.R. Discussion Papers.
  11. Maia Güell & Barbara Petrongolo, 2000. "Workers Transitions from Temporary to Permanent Employment: the Spanish Case," CEP Discussion Papers dp0438, Centre for Economic Performance, LSE.
  12. Nickell, S J, 1979. "The Effect of Unemployment and Related Benefits on the Duration of Unemployment," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 89(353), pages 34-49, March.
  13. Berg, Gerard J. van den & Klaauw, Bas van der, 1998. "Combining micro and macro unemployment data," Serie Research Memoranda, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics 0041, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
  14. Schmitt, John & Wadsworth, Jonathan, 1993. "Unemployment Benefit Levels and Search Activity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(1), pages 1-24, February.
  15. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-62, December.
  16. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, Econometric Society, vol. 47(5), pages 1249-66, September.
  17. Jenkins, Stephen P. & Garcia-Serrano, Carlos, 2000. "Re-employment probabilities for Spanish men: what role does the unemployment benefit system play?," ISER Working Paper Series 2000-17, Institute for Social and Economic Research.
  18. Alison L Booth & Juan J. Dolado & Jeff Frank, 2002. "Symposium On Temporary Work Introduction," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(480), pages F181-F188, June.
  19. Dale T. Mortensen, 1977. "Unemployment insurance and job search decisions," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
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  21. repec:fth:prinin:433 is not listed on IDEAS
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Citations

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Cited by:
  1. Maia Güell & Luojia Hu, 2003. "Estimating the probability of leaving unemployment using uncompleted spells from repeated cross-section data," Economics Working Papers 688, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Bukowski, Maciej & Lewandowski, Piotr & Koloch, Grzegorz & Baranowska, Anna & Magda, Iga & Szydlowski, Arkadiusz & Bober, Magda & Bieliński, Jacek & Zawistowski, Julian & Sarzalska, Malgorzata, 2008. "Employment in Poland 2007: Security on flexible labour market," MPRA Paper 14284, University Library of Munich, Germany.
  3. J.I. García-Pérez & Fernando Muñoz-Bullón, 2003. "Are Temporary Help Agencies Changing Mobility Patterns In The Spanish Labour Market?," Business Economics Working Papers, Universidad Carlos III, Departamento de Economía de la Empresa wb035513, Universidad Carlos III, Departamento de Economía de la Empresa.
  4. Dario Sciulli, 2006. "Making the Italian Labor Market More Flexible: An Evaluation of the Treu Reform," Economics Working Papers we063408, Universidad Carlos III, Departamento de Economía.
  5. cipollone piero & Anita Guelfi, 2003. "tax credit policy and firms' behaviour: the case of subsidy to open-end labour contract in italy," Temi di discussione (Economic working papers), Bank of Italy, Economic Research and International Relations Area 471, Bank of Italy, Economic Research and International Relations Area.
  6. Garrouste, Christelle & Kozovska, Kornelia & Arjona Perez, Elena, 2010. "Education and Long-Term Unemployment," MPRA Paper 25073, University Library of Munich, Germany.
  7. Chung, Heejung, 2005. "Different paths towards Flexibility, Deregulated employment protection or temporary employment?," MPRA Paper 2396, University Library of Munich, Germany, revised Oct 2005.
  8. Edoardo Di Porto & Leandro Elia & Cristina Tealdi, 2013. "The "emersion" effect: an ex post and ex ante social program evaluation on labor tax evasion in Italy," Working Papers 2/2013, IMT Institute for Advanced Studies Lucca, revised Jun 2013.

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