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Landing a Permanent Contract: Do Job Interruptions and Employer Diversification Matter?

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  • Yolanda Rebollo Sanz

    ()
    (Department of Economics, Universidad Pablo de Olavide)

Abstract

A discrete-time multivariate hazard model is applied to investigate whether an individual’s employment history conditions her chances of eventually obtaining a permanent contract in the Spanish labour market. This study differentiates the incidence of lagged duration dependence from occurrence dependence and individual employment history conditions are not exclusively defined in terms of the number of temporary contracts and job interruptions experienced by the worker, but also by the diversity of her past employers. My analysis focuses on Spanish labour market entrants aged between 18 and 29 for the 1995-2006 period, and performs the estimation by three age cohort groups separately to control for heterogeneity in initial conditions. The results suggest that some workers may become “trapped” in the temporary employment bracket, since their chances of obtaining a permanent contract seem to drop after some months of accumulating several temporary contracts under the same employer between bouts of unemployment. By contrast, moving from one firm to another as a temporary worker might have a positive influence on exit rates to permanent employment. Hence, this paper highlight that it is important to take into account whether or not the worker remains in the same firm when accumulating temporary contracts to test for the stepping stone effect of temporary contracts.

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Bibliographic Info

Paper provided by Universidad Pablo de Olavide, Department of Economics in its series Working Papers with number 09.07.

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Length: 46 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:pab:wpaper:09.07

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Keywords: Event history model; lagged duration dependence; occurrence dependence; stepping stone effect; firm mobility; Multiple Spells duration models; Job Interruptions;

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  1. José Varejão & Pedro Portugal, 2003. "Why Do Firms Use Fixed-Term Contracts?," CEF.UP Working Papers, Universidade do Porto, Faculdade de Economia do Porto 0310, Universidade do Porto, Faculdade de Economia do Porto.
  2. Hernanz, Virginia & Jimeno, Juan Francisco & Kugler, Adriana D., 2003. "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labour Market Reforms," CEPR Discussion Papers, C.E.P.R. Discussion Papers 3724, C.E.P.R. Discussion Papers.
  3. Ham, John C & LaLonde, Robert J, 1996. "The Effect of Sample Selection and Initial Conditions in Duration Models: Evidence from Experimental Data on Training," Econometrica, Econometric Society, Econometric Society, vol. 64(1), pages 175-205, January.
  4. Zijl, Marloes & van den Berg, Gerard J. & Heyma, Arjan, 2004. "Stepping Stones for the Unemployed: The Effect of Temporary Jobs on the Duration until Regular Work," IZA Discussion Papers 1241, Institute for the Study of Labor (IZA).
  5. Güell, Maia & Petrongolo, Barbara, 2003. "How Binding Are Legal Limits? Transitions from Temporary to Permanent Work in Spain," IZA Discussion Papers 782, Institute for the Study of Labor (IZA).
  6. Olympia Bover & Manuel Arellano & Samuel Bentolila, 2002. "Unemployment Duration, Benefit Duration and the Business Cycle," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(479), pages 223-265, April.
  7. Catalina Amuedo-Dorantes, 2000. "Work transitions into and out of involuntary temporary employment in a segmented market: Evidence from Spain," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 53(2), pages 309-325, January.
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  12. Yolanda Rebollo Sanz & Jose Ignacio García Pérez, 2007. "The use of permanent contracts across Spanish regions: Do regional wage subsidies work?," Working Papers, Universidad Pablo de Olavide, Department of Economics 07.06, Universidad Pablo de Olavide, Department of Economics.
  13. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 112(480), pages F189-F213, June.
  14. Doiron, Denise & Gørgens, Tue, 2008. "State dependence in youth labor market experiences, and the evaluation of policy interventions," Journal of Econometrics, Elsevier, Elsevier, vol. 145(1-2), pages 81-97, July.
  15. Olympia Bover & Ramón Gómez, 2004. "Another look at unemployment duration: exit to a permanent vs. a temporary job," Investigaciones Economicas, Fundación SEPI, Fundación SEPI, vol. 28(2), pages 285-314, May.
  16. Edward P. Lazear, 2003. "Firm-Specific Human Capital: A Skill-Weights Approach," NBER Working Papers 9679, National Bureau of Economic Research, Inc.
  17. Van den Berg, Gerard J., 2001. "Duration models: specification, identification and multiple durations," Handbook of Econometrics, Elsevier, in: J.J. Heckman & E.E. Leamer (ed.), Handbook of Econometrics, edition 1, volume 5, chapter 55, pages 3381-3460 Elsevier.
  18. Heckman, James J & Borjas, George J, 1980. "Does Unemployment Cause Future Unemployment? Definitions, Questions and Answers from a Continuous Time Model of Heterogeneity and State Dependence," Economica, London School of Economics and Political Science, London School of Economics and Political Science, vol. 47(187), pages 247-83, August.
  19. Edward P. Lazear & Paul Oyer, 2007. "Personnel Economics," NBER Working Papers 13480, National Bureau of Economic Research, Inc.
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