Why do firms use fixed-term contracts?

Arbeitspapier

Temporary forms of employment account for a variable but never trivial share of total employment in both the U.S. and in Europe. In this article we look at how one specific form of temporary employment - employment with fixed-term contracts - fits into employers' hiring policies. We find that human capital variables (schooling, skills and employer-provided training) as measured at the levels of the worker and the workplace are important determinants of the employers' decisions to hire with fixed-term contracts and to promote temporary workers to permanent positions. Those employers that hire more with fixed-term contracts are also those that are more likely to offer a permanent position to their newly-hired temporary employees. Our results indicate that fixed-term contracts are used as mechanisms for screening workers for permanent positions.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4380

Classification and Topics

• Classification: Wirtschaft ; Labor Demand ; Labor Contracts
• Subject: Fixed-term contracts ; adjustment costs ; labor demand ; Befristeter Arbeitsvertrag ; Arbeitsnachfrage ; Humankapital ; Anpassungskosten ; Theorie ; Portugal

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Portugal, Pedro ; Varejão, José
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35968
• URN: urn:nbn:de:101:1-200910085849
• Last update: 10.03.2025, 11:43 AM CET