Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain

54 Pages Posted: 7 Mar 2016

See all articles by J. Ignacio Garacia-Perez

J. Ignacio Garacia-Perez

Universidad Pablo de Olavide - Department of Economics

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice; National Bureau of Economic Research (NBER)

Judit Vall Castelló

Universitat Pompeu Fabra - Center for Research in Health and Economics (CRES)

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Abstract

By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers' careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high-school dropouts working before age 19 by 9%. However, in the longer run, the reform reduced number of days worked (by 4.5%) and earnings (by 9%).

Keywords: temporary contracts, long-term impact, labour market career

JEL Classification: J08

Suggested Citation

Garcia-Perez, J. Ignacio and Marinescu, Ioana Elena and Castelló, Judit Vall, Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain. IZA Discussion Paper No. 9777, Available at SSRN: https://ssrn.com/abstract=2742565 or http://dx.doi.org/10.2139/ssrn.2742565

J. Ignacio Garcia-Perez (Contact Author)

Universidad Pablo de Olavide - Department of Economics ( email )

Ctra. Utrera, Km.1
Sevilla, Seville 41010
Spain

HOME PAGE: http://www.upo.es/econ/garcia/

Ioana Elena Marinescu

University of Pennsylvania - School of Social Policy & Practice ( email )

3701 Locust Walk
Philadelphia, PA 19104-6214
United States

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Judit Vall Castelló

Universitat Pompeu Fabra - Center for Research in Health and Economics (CRES) ( email )

Ramon Trias Fargas, 25-27
Barcelona, 08005
Spain

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