Working Paper: NBER ID: w22048
Authors: J. Ignacio García-Pérez; Judit Vall Castell; Ioana Marinescu
Abstract: By reducing the commitment made by employers, fixed-term contracts can help low-skilled youth find a first job. However, the long-term impact of fixed-term contracts on these workers’ careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed-term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high-school dropouts working before age 19 by 9%. However, in the longer run, the reform reduced number of days worked (by 4.5%) and earnings (by 9%).
Keywords: Fixed-term contracts; Low-skilled youth; Labor market outcomes; Spain
JEL Codes: J3; J41; J48; J64
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Workers beginning under fixed-term contracts (J63) | More likely to continue working under non-permanent contracts (J63) |
| Liberalization of fixed-term contracts in 1984 (J63) | Increased probability of male high school dropouts working before age 19 (I21) |
| Liberalization of fixed-term contracts in 1984 (J63) | Decrease in the number of days worked (J22) |
| Liberalization of fixed-term contracts in 1984 (J63) | Decrease in earnings (J31) |
| Liberalization of fixed-term contracts in 1984 (J63) | Long-term negative impact on labor market outcomes (F66) |