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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.

Suggested Citation

  • Maia Güell & Barbara Petrongolo, 2003. "How binding are legal limits? Transitions from temporary to permanent work in Spain," Economics Working Papers 682, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2005.
    • Handle: RePEc:upf:upfgen:682
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    More about this item

    Keywords

    Fixed-term contracts; duration models;

    JEL classification:

    • C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General

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