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Are Temporary Jobs a Port of Entry into Permanent Employment? Evidence from Matched Employer-Employee Data

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  • Fabio Berton

    ()
    (Department of Public Policy and Public Choice, University of Eastern Piedmont)

  • Francesco Devicienti

    ()
    (Department of Economics and Public Finance "G. Prato", University of Torino)

  • Lia Pacelli

    ()
    (Department of Economics and Public Finance "G. Prato", University of Torino)

Abstract

Are temporary jobs a port of entry into permanent employment? In this paper we argue that the answer crucially depends on the type of temporary contracts being considered, as the different contracts observed in practice are typically characterized by varying combinations of training, tax-incentives and EPL provisions. We base our empirical evidence on a longitudinal sample of labour market entrants in Italy, a country where a large number of temporary contracts coexist with a relatively high employment protection for standard employees. We estimate dynamic multinomial logit models with fixed effects, to allow for non-random sorting of workers into the different types of contracts. We show that the transition to permanent employment is more likely for individuals holding any type of temporary contracts than for the unemployed, thus broadly confirming the existence of port-of-entry effects. Yet, not all temporary contracts are the same: training contracts are the best port of entry, while freelance contracts are the worst. We also show that temporary contracts are generally a port-of-entry into a permanent position within the same employer, but not across firms, implying that little general-purpose training is gained while on temporary jobs. Moreover, the time needed for an internal transformation from a temporary to a permanent position appears rather long, suggesting that firms are likely to use (a sequence of) temporary contracts as a cost-reduction strategy, rather than as a screening device for newly hired workers.

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File URL: http://web.econ.unito.it/prato/papers/n6.pdf
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Bibliographic Info

Paper provided by Former Department of Economics and Public Finance "G. Prato", University of Torino in its series Working papers with number 6.

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Length: 27 pages
Date of creation: Jun 2009
Date of revision:
Handle: RePEc:tur:wpaper:6

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Keywords: temporary jobs; port of entry; matched employer-employee data; dynamic multinomial logit models; state dependence; fixed effects;

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References

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Blog mentions

As found by EconAcademics.org, the blog aggregator for Economics research:
  1. Quanta flessibilità è necessaria?
    by critealdi in Noise from Amerika on 2012-03-15 10:23:36
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Cited by:
  1. Andrea Filippo Presbitero & Matteo G. Richiardi & Alessia Amighini, 2012. "Is labor flexibility a substitute to offshoring? Evidence from Italian manafacturing," Mo.Fi.R. Working Papers 72, Money and Finance Research group (Mo.Fi.R.) - Univ. Politecnica Marche - Dept. Economic and Social Sciences.
  2. Bruno Contini, 2010. "Youth Employment in Europe: Institutions and Social Capital Explain Better than Mainstream Economics," LABORatorio R. Revelli Working Papers Series 102, LABORatorio R. Revelli, Centre for Employment Studies.
  3. Lorenzo Cappellari & Carlo Dell’Aringa & Marco Leonardi, 2012. "Temporary Employment in Italy," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 10(1), pages 55-62, 04.
  4. Bruno Contini, 2012. "Youth employment in Europe: do institutions and social capital explain better than mainstream economics?," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 9(2), pages 247-277, August.
  5. Gabriella Berloffa & Francesca Modena & Paola Villa, 2011. "Inequality of opportunity for young people in Italy: Understanding the role of circumstances," Working Papers 241, ECINEQ, Society for the Study of Economic Inequality.
  6. Bruno, Giovanni S. F. & Caroleo, Floro Ernesto & Dessy, Orietta, 2012. "Stepping Stones versus Dead End Jobs: Exits from Temporary Contracts in Italy after the 2003 Reform," IZA Discussion Papers 6746, Institute for the Study of Labor (IZA).
  7. Matteo PICCHIO & Stefano STAFFOLANI, 2013. "Does Apprenticeship Improve Job Opportunities? A Regression Discontinuity Approach," Working Papers 393, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  8. Tealdi, Cristina, 2011. "Typical and atypical employment contracts: the case of Italy," MPRA Paper 39456, University Library of Munich, Germany.
  9. Isabella David, 2009. "Composition Bias and Italian Wage Rigidities over the Business Cycle," LABORatorio R. Revelli Working Papers Series 92, LABORatorio R. Revelli, Centre for Employment Studies.
  10. Bruno, Giovanni S. F. & Caroleo, Floro Ernesto & Dessy, Orietta, 2013. "Temporary Contracts and Young Workers' Job Satisfaction in Italy," IZA Discussion Papers 7716, Institute for the Study of Labor (IZA).
  11. Stefano Sacchi & Patrik Vesan, 2011. "Interpreting employment policy change in Italy since the 1990s: nature and dynamics," Carlo Alberto Notebooks 228, Collegio Carlo Alberto.
  12. Francesco Chelli & Chiara Gigliarano, 2012. "An Analysis of the Italian Labour Market based on Compulsory Communications Data," Rivista di statistica ufficiale, ISTAT - Italian National Institute of Statistics - (Rome, ITALY), vol. 14(2-3), pages 5-17.

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