Why do firms hire on a fixed-term basis? Evidence from longitudinal data
Fabrizio Colonna (fabrizio.colonna@bancaditalia.it) and
Giulia Giupponi (g.giupponi@lse.ac.uk)
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Fabrizio Colonna: Banca d'Italia
Giulia Giupponi: London School of Economics
No 297, Questioni di Economia e Finanza (Occasional Papers) from Bank of Italy, Economic Research and International Relations Area
Abstract:
The political and economic debate in Italy accompanying the labour market reforms of recent decades has often focused on the use of fixed-term contracts. Fears have frequently been raised about the possible use of temporary contracts not to satisfy short-term productive requirements (�buffer-stock� motive) or to screen suitable candidates for permanent positions, but rather to manage worker turnover by avoiding the higher costs associated with open-ended contracts (especially those related to dismissals). While it is very difficult to separate out the various economic rationales for using fixed-term contracts, this paper aims to assess to what extent Italian firms use fixed-term contracts to meet monthly production needs. A simple correlation analysis shows that firms in sectors with the strongest variations in monthly production levels make more extensive use of temporary contracts: almost one third of fixed-term hiring is attributable to seasonality. Using two behavioural models where firms choose whether to hire and on what contract, it is estimated that monthly production peaks account for a non-negligible share (at least 25 per cent) of fixed-term hires.
Keywords: temporary jobs; fixed term contracts; seasonality (search for similar items in EconPapers)
JEL-codes: J23 J41 (search for similar items in EconPapers)
Date: 2015-11
New Economics Papers: this item is included in nep-eur
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