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Temporary jobs and state dependence in Italy

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  • Picchio, M.

    (Tilburg University)

Abstract

A dynamic unobserved effects probit analysis has been carried out to test the hypothesis of state dependence of temporary jobs and to understand their determinants. The econometric analysis has been conducted using the 2000, 2002, and 2004 waves of the Survey of Italian Households' Income and Wealth. The results show that, firstly, jobless and unstable workers are more likely to end up in temporary contracts. Secondly, there is a significant true state dependence effect of temporary contracts that might be due to the fact that firms are systematically using temporary jobs to face demand uncertainty: loss of motivation and depreciation of human capital due to low firm-specific investments may make temporary workers less likely to jump on stabler job relationships. Moreover, the true state dependence could be related to the presence of a dual labour market, segmented into "bad" and "good" jobs. Thirdly, a significant feedback effect from past temporary jobs to recent unemployment spells has been detected. Therefore, jobless and unstable workers are more likely to end up into temporary relationship generating a loss of human capital, affecting the workers' allocation in the whole economy, and widening the gap between possibly segmented labour markets. The policy maker might be aware of these costs associated to the widespread of temporary jobs and design policies to target those workers suffering most from the trap of temporary positions.

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Bibliographic Info

Paper provided by Tilburg University in its series Open Access publications from Tilburg University with number urn:nbn:nl:ui:12-5573980.

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Date of creation: 2006
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Handle: RePEc:ner:tilbur:urn:nbn:nl:ui:12-5573980

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Web page: http://www.tilburguniversity.edu/

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  1. Gagliarducci, Stefano, 2005. "The dynamics of repeated temporary jobs," Labour Economics, Elsevier, vol. 12(4), pages 429-448, August.
  2. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones or Dead Ends?," LABORatorio R. Revelli Working Papers Series 8, LABORatorio R. Revelli, Centre for Employment Studies.
  3. Jeffrey M. Wooldridge, 2005. "Simple solutions to the initial conditions problem in dynamic, nonlinear panel data models with unobserved heterogeneity," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 20(1), pages 39-54.
  4. Farber, Henry S, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," Journal of Labor Economics, University of Chicago Press, vol. 17(4), pages S142-69, October.
  5. Chamberlain, Gary, 1980. "Analysis of Covariance with Qualitative Data," Review of Economic Studies, Wiley Blackwell, vol. 47(1), pages 225-38, January.
  6. Sarah Brown & John G. Sessions, 2003. "Earnings, Education, and Fixed-Term Contracts," Scottish Journal of Political Economy, Scottish Economic Society, vol. 50(4), pages 492-506, 09.
  7. Martin Biewen, 2004. "Measuring State Dependence in Individual Poverty Status: Are there Feedback Effects to Employment Decisions and Household Composition?," Discussion Papers of DIW Berlin 429, DIW Berlin, German Institute for Economic Research.
  8. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 475-494, September.
  9. Picchio, M., 2006. "Wage differentials and temporary jobs in Italy," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5573981, Tilburg University.
  10. Andrea Ichino & Fabrizia Mealli & Tommaso Nannicini, 2005. "Temporary Work Agencies in Italy: A Springboard Toward Permanent Employment?," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 64(1), pages 1-27, September.
  11. Henry S. Farber, 1999. "Alternative and Part-Time Employment Arrangements as a Response to Job Loss," NBER Working Papers 7002, National Bureau of Economic Research, Inc.
  12. Wooldridge, Jeffrey M., 2000. "A framework for estimating dynamic, unobserved effects panel data models with possible feedback to future explanatory variables," Economics Letters, Elsevier, vol. 68(3), pages 245-250, September.
  13. Steen Winther Blindum, 2003. "Relaxing the Strict Exogeneity Assumption in a Dynamic Random Probit Model," CAM Working Papers 2003-04, University of Copenhagen. Department of Economics. Centre for Applied Microeconometrics.
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Cited by:
  1. Luca RICCETTI, 2010. "Minimum Tracking Error Volatility," Working Papers 340, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  2. Fabio FIORILLO & Agnese SACCHI, 2010. "I Want to Free-ride. An Opportunistic View on Decentralization Versus Centralization Problem," Working Papers 346, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Lia Pacelli & Silvia Pasqua & Claudia Villosio, 2007. "What does the stork bring to women's working career?," CHILD Working Papers wp16_07, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  4. Ugo FRATESI, 2010. "The National and International Effects;of Regional Policy Choices: Agglomeration Economies, Peripherality and Territorial Characteristics," Working Papers 344, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. 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.
  6. 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.

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