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Is Temporary Employment a Stepping Stone for Unemployed School Leavers?

  • Verhofstadt, Elsy
  • Goebel, Christian

Many school-leavers enter the labour market via temporary employment. In this paper we investigate the impact of a temporary employment spell at the start of the career on the transition rate into permanent employment. We compare the case of temporary employment to the hypothetical case of a direct transition from unemployment to permanent employment. In order to control for selective participation in temporary employment we include a large set of explanatory variables which have been especially collected to study school-leavers. We apply the AIC-information criterion to select the appropriate specification for unobserved heterogeneity. Based on the information criteria we conclude that given our data, there is no support for a model with selection in unobserved characteristics. Simulation exercises provide insights into the development of the effect of temporary employment over time. For a sample of unemployed Flemish school-leavers we find that in the short run temporary employment delays the school leaver's transition to permanent employment. However, in the long run temporary employment acts as a stepping stone and decreases the duration until permanent employment.

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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-093.

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Date of creation: 2008
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Handle: RePEc:zbw:zewdip:7435
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