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Stepping-stones for the unemployed: The effect of temporary jobs on the duration until regular work

Author: Gerard J. van den Berg, And Arjan Heyma, And Marloes Zijl, And

Published in: Journal of population economics 2011, vol. 24, no. 1, pp.107-139

Summary of Working paper 2004:19

Individual labour market transitions from unemployment into temporary work are often
succeeded by a transition from temporary into regular work. We investigate whether
temporary work increases the transition rate to regular work. In that case, temporary work
may enhance labour market efficiency. We use longitudinal survey data of individuals to
estimate a multi-state duration model, applying the ‘timing of events’ approach. To deal with
selectivity, the model incorporates transitions from unemployment to temporary jobs and
unobserved determinants of the transition rates. The data contain multiple spells in labour
market states at the individual level. We analyse the results using novel graphical
representations. The results unambiguously show that temporary jobs serve as steppingstones
towards regular employment. They shorten the duration of unemployment and they
substantially increase the fraction of unemployed workers who have regular work within a
few years after entry into unemployment, as compared to a situation without temporary jobs.

Individual labour market transitions from unemployment into temporary work are often succeeded by a transition from temporary into regular work. We investigate whether temporary work increases the transition rate to regular work. In that case, temporary work may enhance labour market efficiency. We use longitudinal survey data of  individuals to estimate a multi-state duration model, applying the ‘timing of events’ approach. To deal with selectivity, the model incorporates transitions from unemployment to temporary jobs and unobserved determinants of the transition rates. The data contain multiple spells in labour market states at the individual level. We analyse the results using novel graphical representations. The results unambiguously show that temporary jobs serve as stepping-stones towards regular employment. They shorten the duration of unemployment and they substantially increase the fraction of unemployed workers who have regular work within a few years after entry into unemployment, as compared to a situation without temporary jobs.

 

Keywords: unemployment, fixed term contracts, temporary work, job search, duration model, treatment effect.
JEL codes: J64, C41.

Research areas