The adverse effects of short-term contracts on young workers: Evidence from Italy

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Abstract

Short‐term employment contracts have been deployed rapidly across European countries in the past decades. In this paper we suitably modify a known search and matching theoretical framework to quantify the effects of temporary contracts reforms on the present discounted value of the utility of junior and senior workers. We calibrate the model using data from Italy and find that while senior workers may benefit or not from the diffusion of temporary contracts depending on the productivity of the match, the utility of junior workers is always lower in the presence of temporary employment. This result is ascribable to the high rates of turnover associated with temporary contracts which offset the benefits of the increased labour market flexibility.
Original languageEnglish
Pages (from-to)751-793
Number of pages43
JournalManchester School
Volume87
Issue number6
Early online date3 Feb 2019
DOIs
Publication statusPublished - Dec 2019

ASJC Scopus subject areas

  • Economics and Econometrics

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