Scandinavian Working Papers in Economics

Working Paper Series,
IFAU - Institute for Evaluation of Labour Market and Education Policy

No 2004:19: Stepping-stones for the unemployed: The effect of temporary jobs on the duration until regular work

Marloes Zijl , Gerard J van den Berg () and Arjan Heyma ()
Additional contact information
Marloes Zijl: SEO University of Amsterdam, Postal: Roetersstraat 29, 1018 WB Amsterdam, Holland
Gerard J van den Berg: Free University Amsterdam, Postal: De Boelelaan 1105, 1081 HV Amsterdam, Holland
Arjan Heyma: SEO University of Amsterdam, Postal: Roetersstraat 29, 1018 WB Amsterdam, Holland

Abstract: Individual labour market transitions from unemployment into temporary work are often succeeded by a transition from temporary into regular work. We investigate whether temporary work increases the transition rate to regular work. In that case, temporary work may enhance labour market efficiency. We use longitudinal survey data of individuals to estimate a multi-state duration model, applying the “timing of events” approach. To deal with selectivity, the model incorporates transitions from unemployment to temporary jobs and unobserved determinants of the transition rates. The data contain multiple spells in labour market states at the individual level. We analyse the results using novel graphical representations. The results unambiguously show that temporary jobs serve as stepping-stones towards regular employment. They shorten the duration of unemployment and they substantially increase the fraction of unemployed workers who have regular work within a few years after entry into unemployment, as compared to a situation without temporary jobs.

Keywords: Unemployment; fixed term contracts; temporary work; job search; duration model; treatment effect

JEL-codes: C41; J64

32 pages, November 1, 2004

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