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How binding are legal limits? Transitions from temporary to permanent work in Spain

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  • Maia Güell
  • Barbara Petrongolo

Abstract

This paper studies the duration pattern of …xed-term contracts and the determinants of their conversion into permanent ones in Spain, where the share of …xed-term employment is the highest in Europe. We estimate a duration model for temporary employment, with competing risks of terminating into permanent employment versus alternative states, and ‡exible duration dependence. We …nd that conversion rates are generally below 10%. Our estimated conversion rates roughly increase with tenure, with a pronounced spike at the legal limit, when there is no legal way to retain the worker on a temporary contract. We argue that estimated di¤erences in conversion rates across categories of workers can stem from di¤erences in worker outside options and thus the power to credibly threat to quit temporary jobs.

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Bibliographic Info

Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 682.

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Date of creation: May 2003
Date of revision: Jul 2005
Handle: RePEc:upf:upfgen:682

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Web page: http://www.econ.upf.edu/

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Keywords: Fixed-term contracts; duration models;

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