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Fixed-Term Contracts and the Duration Distribution of Unemployment

Listed author(s):
  • Maia Güell

In the mid-1980s, many European countries introduced fixed-term contracts. Since then their labor markets have become more dynamic. This paper studies the implications of such reforms for the duration distribution of unemployment, with particular emphasis on the changes in the duration dependence. I estimate a parametric duration model using cross-sectional data drawn from the Spanish Labor Force Survey from 1980 to 1994 to analyze the chances of leaving unemployment before and after the introduction of fixed-term contracts. I find that duration dependence has increased since such reform. Semi-parametric estimation of the model also shows that for long spells, the probability of leaving unemployment has decreased since such reform.

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Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0505.

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Date of creation: May 2001
Handle: RePEc:cep:cepdps:dp0505
Contact details of provider: Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

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  1. Alison L Booth & Juan J. Dolado & Jeff Frank, 2002. "Symposium On Temporary Work Introduction," Economic Journal, Royal Economic Society, vol. 112(480), pages 181-188, June.
  2. Bover, O. & Arellano, M. & Bentolila, S., 1997. "Unemployment Duration, Benefit Duration, and the Business Cycle," Papers 9717, Centro de Estudios Monetarios Y Financieros-.
  3. Maia Güell, 2000. "Fixed-Term Contracts and Unemployment: An Efficiency Wage Analysis," CEP Discussion Papers dp0461, Centre for Economic Performance, LSE.
  4. Wadsworth, Jonathan, 1991. "Unemployment Benefits and Search Effort in the UK Labour Market," Economica, London School of Economics and Political Science, vol. 58(229), pages 17-34, February.
  5. Alfonso Alba-Ramirez, 1999. "Explaining the transitions out of unemployment in Spain: the effect of unemployment insurance," Applied Economics, Taylor & Francis Journals, vol. 31(2), pages 183-193.
  6. van den Berg, Gerard J. & van der Klaauw, Bas, 2000. "Combining Micro and Macro Unemployment Duration Data," IZA Discussion Papers 109, Institute for the Study of Labor (IZA).
  7. Mortensen, Dale T, 1970. "Job Search, the Duration of Unemployment, and the Phillips Curve," American Economic Review, American Economic Association, vol. 60(5), pages 847-862, December.
  8. Olivier Jean Blanchard & Peter Diamond, 1994. "Ranking, Unemployment Duration, and Wages," Review of Economic Studies, Oxford University Press, vol. 61(3), pages 417-434.
  9. Garcia Serrano, Carlos, 1999. "Worker Turnover and Job Reallocation: The Role of Fixed-Term Contracts," Oxford Economic Papers, Oxford University Press, vol. 51(1), pages 237-237, January.
  10. Nickell, Stephen J, 1979. "Estimating the Probability of Leaving Unemployment," Econometrica, Econometric Society, vol. 47(5), pages 1249-1266, September.
  11. Maia Güell & Barbara Petrongolo, 2000. "Workers Transitions from Temporary to Permanent Employment: the Spanish Case," CEP Discussion Papers dp0438, Centre for Economic Performance, LSE.
  12. Nickell, S J, 1979. "The Effect of Unemployment and Related Benefits on the Duration of Unemployment," Economic Journal, Royal Economic Society, vol. 89(353), pages 34-49, March.
  13. Schmitt, John & Wadsworth, Jonathan, 1993. "Unemployment Benefit Levels and Search Activity," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 55(1), pages 1-24, February.
  14. Alonso-Borrego, César & Aguirregabiria, Víctor, 2009. "Labor contracts and flexibility : evidence from a labor market reform in Spain," UC3M Working papers. Economics we091811, Universidad Carlos III de Madrid. Departamento de Economía.
  15. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
  16. Maia Guell, 2000. "Fixed-term Contracts and Unemployment: an Efficiency Wage Analysis," Working Papers 812, Princeton University, Department of Economics, Industrial Relations Section..
  17. repec:pri:indrel:dsp01zc77sq114 is not listed on IDEAS
  18. Jenkins, Stephen P. & Garcia-Serrano, Carlos, 2000. "Re-employment probabilities for Spanish men: what role does the unemployment benefit system play?," ISER Working Paper Series 2000-17, Institute for Social and Economic Research.
  19. Stephen Machin & Alan Manning, 1998. "The causes and consequences of long-term unemployment in Europe," LSE Research Online Documents on Economics 20255, London School of Economics and Political Science, LSE Library.
  20. Atkinson, Anthony B & Micklewright, John, 1991. "Unemployment Compensation and Labor Market Transitions: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 29(4), pages 1679-1727, December.
  21. repec:fth:prinin:433 is not listed on IDEAS
  22. Dale T. Mortensen, 1977. "Unemployment Insurance and Job Search Decisions," ILR Review, Cornell University, ILR School, vol. 30(4), pages 505-517, July.
  23. Frank Dietrich & Hartmut Kliemt & Michael Imhoff, 2002. "Introduction," Homo Oeconomicus, Institute of SocioEconomics, vol. 19, pages 7-8.
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