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Title:Why do firms use fixed-term contracts? PDF Logo
Authors:Portugal, Pedro
Varejão, José
Issue Date:2009
Series/Report no.:IZA Discussion Papers 4380
Abstract:Temporary forms of employment account for a variable but never trivial share of total employment in both the U.S. and in Europe. In this article we look at how one specific form of temporary employment - employment with fixed-term contracts - fits into employers' hiring policies. We find that human capital variables (schooling, skills and employer-provided training) as measured at the levels of the worker and the workplace are important determinants of the employers' decisions to hire with fixed-term contracts and to promote temporary workers to permanent positions. Those employers that hire more with fixed-term contracts are also those that are more likely to offer a permanent position to their newly-hired temporary employees. Our results indicate that fixed-term contracts are used as mechanisms for screening workers for permanent positions.
Subjects:Fixed-term contracts
adjustment costs
labor demand
JEL:J23
J41
Persistent Identifier of the first edition:urn:nbn:de:101:1-200910085849
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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