Scandinavian Working Papers in Economics

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

No 2005:18: Stepping-stones or dead-ends? An analysis of Swedish replacement contracts

Laura Larsson , Linus Lindqvist () and Oskar Nordström Skans ()
Additional contact information
Laura Larsson: SNS - Studieförbundet Näringsliv och Samhälle, Postal: SNS , Jakobsbergsgatan 18 , Box 5629 , S-114 86 Stockholm
Linus Lindqvist: IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden
Oskar Nordström Skans: IFAU - Institute for Labour Market Policy Evaluation, Postal: P O Box 513, SE-751 20 Uppsala, Sweden

Abstract: The paper studies if temporary jobs in the form of fixed-term replacement contracts reduce the risk of future unemployment among job-seekers. Using exact matching on labour market history and personal characteristics we find positive effects of the replacement contract on future labour market status. We also find that the longer the replacement contract the higher the probability of having an open ended contract at the same site 2–2.5 years after the start of the contract. No effect of the length is found on unemployment, employment or wages. Overall, the results suggest that receiving a fixed term contract reduces the risk of future unemployment, and that a longer contract increases the position within the workplace but not on the market in general.

Keywords: Unemployment; temporary employment; matching

JEL-codes: J64

37 pages, June 28, 2005

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