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|The effects of fixed-term contracts on the duration distribution of unemployment: the Spanish case
|Working Papers (Princeton University. Industrial Relations Section) ; 443
|This paper studies the effects of the introduction of ﬁxed-term contracts in Spain on the duration distribution of unemployment, with particular emphasis on the changes in duration dependence. Since the introduction of ﬁxed-term contracts in the mid 1980s, the Spanish labor market has become more dynamic in terms of inﬂows and outﬂows from unemployment to employment. I estimate a parametric duration model using cross-sectional data drawn from the Spanish Labor Force Survey from 1980 to 1994, which allows me to analyze the chances of leaving unemployment before and after the introduction of ﬁxed-term contracts. I ﬁnd evidence that for very short durations, of up to ﬁve months, the probability of leaving unemployment has increased since the introduction of ﬁxed-term contracts. But the reverse is true for longer durations. Also, the chances of ﬁnding a job are signiﬁcantly higher for those workers who became unemployed because their ﬁxed-term contract came to an end than for those who lost their job for other reasons. In addition, there is less duration dependence for those who lost their job due to the expiration of a ﬁxed-term contract than for those who lost their job for other reasons.
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