Abstract

Recent works on temporary help employment have analyzed many issues but contract length. The paper addresses this speci…c issue with a twofold aim: …rst, to test the theoretical literature on contract length in the speci…c case of temporary help employment; second, to shed light on the duration of a single contract, which happens to be a critical feature of the “precariousness ” of temporary workers. In fact, contract duration is positively correlated with the probability to jump to permanent employment. According to early theoretical contributions, labor contract length is negatively a¤ected by uncertainty or volatility. More recent models, however, stress the positive e¤ect of uncertainty on contract length. Drawing on the latter, the paper develops a simple theoretical framework to explain the duration of temporary contracts. The framework predicts a positive e¤ect of both production volatility and the tightness of the labor market. Using data on temporary workers hired by one of the leading agencies in Italy, the econometric analysis con…rms both e¤ects, even after carefully controlling for industry-speci…c e¤ects.

Citations