Why do Firms Use Fixed-Term Contracts?
Pedro Portugal and
Jose Varejao ()
Working Papers from Banco de Portugal, Economics and Research Department
This paper investigates the reasons why firms use fixed-term contracts. Two distinctive features of these contracts - reduced firing costs and the prohibition of contract rollover - are highlighted. Firms' decisions related to temporary contracts - the choice of the contract on offer and contract conversion - are modeled within standard adjustment costs and matching settings. Regression analysis is performed on the stock of fixed-term contracts and the flows of temporary workers to permanent positions. Results from a beta-binomial regression model indicate that screening workers for permanent positions is the single most important reason why firms use this type of contract.
JEL-codes: J23 J41 (search for similar items in EconPapers)
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Working Paper: Why Do Firms Use Fixed-Term Contracts? (2009)
Working Paper: Why Do Firms Use Fixed-Term Contracts? (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w200308
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