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Can Fixed-term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain

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  • J Ignacio García-Pérez
  • Ioana Marinescu
  • Judit Vall Castello

Abstract

By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers’ careers may be negative. Using Spanish social security data, we analysed the impact of a large liberalisation in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that over the first 10 years in the labour market, the reform reduced the number of days worked (by 4.9%) and earnings (by 9.8%). Over 27 years of labour market career, yearly earnings losses amount to a persistent 7.3%.

Suggested Citation

  • J Ignacio García-Pérez & Ioana Marinescu & Judit Vall Castello, 2019. "Can Fixed-term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain," The Economic Journal, Royal Economic Society, vol. 129(620), pages 1693-1730.
    • Handle: RePEc:oup:econjl:v:129:y:2019:i:620:p:1693-1730.
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    File URL: http://hdl.handle.net/10.1111/ecoj.12621
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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies

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