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

  • Maia Güell
  • Barbara Petrongolo

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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File URL: http://www.econ.upf.edu/docs/papers/downloads/682.pdf
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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
Contact details of provider: Web page: http://www.econ.upf.edu/

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  12. Juan F. Jimeno & Luis Toharia, 1993. "The effects of fixed-term employment on wages: theory and evidence from Spain," Investigaciones Economicas, Fundación SEPI, vol. 17(3), pages 475-494, September.
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  17. Jovanovic, Boyan, 1984. "Matching, Turnover, and Unemployment," Journal of Political Economy, University of Chicago Press, vol. 92(1), pages 108-22, February.
  18. Muñoz-Bullón, Fernando & García-Pérez, J. Ignacio, 2003. "The nineties in Spain: too much flexibility in the youth labour market?," DEE - Working Papers. Business Economics. WB wb030302, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
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