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Should the maximum duration of fixed-term contracts increase in recessions? Evidence from a law reform

Pedro Martins

No 101, GLO Discussion Paper Series from Global Labor Organization (GLO)

Abstract: Fixed-term contracts (FTCs) may be an important tool to promote employment, particularly in recessions or when permanent contracts are costly. Therefore, it may be useful to vary some of the legal parameters of FTCs over the business cycle, namely increasing their flexibility during downturns. We evaluate this idea by examining the effects of a 2011 law that increased the maximum duration of FTCs in Portugal, in the midst of a recession. Our analysis is based on regression-discontinuity (and difference-in-differences) methods and linked panel data. We find a considerable take up of this measure, as conversions to permanent contracts drop by 20%. Worker churning is reduced significantly, as mobility of eligible fixed-term workers to other firms drops by 10%. Employment also increases significantly for younger workers.

Keywords: Employment law; worker mobility; segmentation; counterfactual evaluation (search for similar items in EconPapers)
JEL-codes: J23 J41 J63 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cta and nep-lma
Date: 2017
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Related works:
Working Paper: Should the maximum duration of fixed-term contracts increase in recessions? Evidence from a law reform (2016) Downloads
Working Paper: Should the Maximum Duration of Fixed-Term Contracts Increase in Recessions? Evidence from a Law Reform (2016) Downloads
Working Paper: Should the maximum duration of fixed-term contracts increase in recessions? Evidence from a law reform (2016) Downloads
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:glodps:101

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