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How binding are legal limits? Transitions from temporary to permanent work in Spain
Güell, Maia; Petrongolo, Barbara
Universitat Pompeu Fabra. Departament d'Economia i Empresa
This paper studies the duration pattern of xed-term contracts and the determinantsof their conversion into permanent ones in Spain, where the share of xed-termemployment is the highest in Europe. We estimate a duration model for temporaryemployment, with competing risks of terminating into permanent employment versusalternative states, and exible duration dependence. We nd that conversion rates aregenerally below 10%. Our estimated conversion rates roughly increase with tenure,with a pronounced spike at the legal limit, when there is no legal way to retain theworker on a temporary contract. We argue that estimated di¤erences in conversionrates across categories of workers can stem from di¤erences in worker outside optionsand thus the power to credibly threat to quit temporary jobs.
15-09-2005
Labour, Public, Development and Health Economics
fixed-term contracts
duration models
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