Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain
By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers’ careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high-school dropouts working before age 19 by 9%. However, in the longer run, the reform reduced number of days worked (by 4.5%) and earnings (by 9%).
Our thanks to A. Hijzen, S. Bentolila, and A. Novo for all their comments, and to the audience at Harris School of Public Policy (Chicago), the OECD Employment Directorate, the SAEe 2013 (Santander), the 8th IZA/World Bank Conference on Employment and Development, (Bonn), THEMA(University of Cergy-Pointoise, Paris), the ESPE-2014 (Braga), the Workshop on “Labour Markets during crises” (NUY Maynooth), the 3rd SEEK Conference at ZEW, Mannheim, the SOLE/EALE world meetings in Montreal 2015. J. Ignacio Garcia Perez acknowledges financial support from the Spanish Ministry of Economics and from the Regional Government of Andalusia (research grants no. SEJ-6882/ECON and ECO2010-21706). Judit Vall Castello acknowledges financial support from the Spanish Ministry of Economics and Competition (research grant ECO2012‐31081). The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.
J Ignacio García-Pérez & Ioana Marinescu & Judit Vall Castello, 2019. "Can Fixed-term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain," The Economic Journal, vol 129(620), pages 1693-1730. citation courtesy of