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Limited Duration Employment


  • Eric F. Smith

    (University of Essex)


This paper analyses a matching model in which labor market participants use temporary employment as a waiting station between searches. Searchers entering the market see all available options. The best match, however, may not be particularly productive. Since all currently available traders are known, immediate search is not worthwhile. Over time, turnover replenishes the stock of potential traders and poor matches eventually find it profitable to search again. Searchers therefore take the best available match and simultaneously formulate if and when to look again. The best matches become indefinite; lower quality matches coexist as temporary employment. This duration increases with match quality and declines as matching improves. (Copyright: Elsevier)

Suggested Citation

  • Eric F. Smith, 2007. "Limited Duration Employment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 444-471, July.
  • Handle: RePEc:red:issued:06-1
    DOI: 10.1016/

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    References listed on IDEAS

    1. Matthew S. Dey & Christopher J. Flinn, 2005. "An Equilibrium Model of Health Insurance Provision and Wage Determination," Econometrica, Econometric Society, vol. 73(2), pages 571-627, March.
    2. Altonji, Joseph G & Paxson, Christina H, 1988. "Labor Supply Preferences, Hours Constraints, and Hours-Wage Trade-Offs," Journal of Labor Economics, University of Chicago Press, vol. 6(2), pages 254-276, April.
    3. Hwang, Hae-shin & Mortensen, Dale T & Reed, W Robert, 1998. "Hedonic Wages and Labor Market Search," Journal of Labor Economics, University of Chicago Press, vol. 16(4), pages 815-847, October.
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    Cited by:

    1. Martin Browning & Thomas F. Crossley & Eric F. Smith, 2007. "Asset Accumulation and Short Term Employment," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 400-423, July.
    2. Shutao Cao & Enchuan Shao & Pedro Silos, 2010. "Fixed-term and permanent employment contracts: theory and evidence," FRB Atlanta Working Paper 2010-13, Federal Reserve Bank of Atlanta.
    3. Kuo, Mien-Yun & Smith, Eric, 2009. "Marketplace matching in Britain: Evidence from individual unemployment spells," Labour Economics, Elsevier, vol. 16(1), pages 37-46, January.
    4. Brencic, Vera, 2009. "Employers' hiring practices, employment protection, and costly search: A vacancy-level analysis," Labour Economics, Elsevier, vol. 16(5), pages 461-479, October.
    5. Pierre Cahuc & Olivier Charlot & Franck Malherbet, 2016. "Explaining The Spread Of Temporary Jobs And Its Impact On Labor Turnover," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 57, pages 533-572, May.
    6. Charlot, Olivier & Malherbet, Franck, 2013. "Education and employment protection," Labour Economics, Elsevier, vol. 20(C), pages 3-23.
    7. Eric Smith & Carlos Carrillo Tudela, 2007. "Wage Dispersion and Wage Dynamics Within and Across Firms," 2007 Meeting Papers 615, Society for Economic Dynamics.

    More about this item


    Search and matching; Employment duration; Temporary jobs; Job turnover;

    JEL classification:

    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search


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