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The Adverse Effects of Short‐term Contracts on Young Workers: Evidence From Italy

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  • Cristina Tealdi

Abstract

Short‐term employment contracts have been deployed rapidly across European countries in the past decades. In this paper we suitably modify a known search and matching theoretical framework to quantify the effects of temporary contracts reforms on the present discounted value of the utility of junior and senior workers. We calibrate the model using data from Italy and find that while senior workers may benefit or not from the diffusion of temporary contracts depending on the productivity of the match, the utility of junior workers is always lower in the presence of temporary employment. This result is ascribable to the high rates of turnover associated with temporary contracts which offset the benefits of the increased labour market flexibility.

Suggested Citation

  • Cristina Tealdi, 2019. "The Adverse Effects of Short‐term Contracts on Young Workers: Evidence From Italy," Manchester School, University of Manchester, vol. 87(6), pages 751-793, December.
    • Handle: RePEc:bla:manchs:v:87:y:2019:i:6:p:751-793
    DOI: 10.1111/manc.12265
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    Cited by:

    1. Marco Francesconi & Daniela Sonedda, 2024. "Does Weaker Employment Protection Lower the Cost of Job Loss?," CESifo Working Paper Series 11417, CESifo.
    2. Davide Fiaschi & Cristina Tealdi, 2024. "Let's roll back! The challenging task of regulating temporary contracts," Papers 2401.17971, arXiv.org.
    3. Daniela Sonedda, 2020. "Guess who's there: employment protection legislation and the degree of substitutability between labour contracts," IAAEU Discussion Papers 202007, Institute of Labour Law and Industrial Relations in the European Union (IAAEU).
    4. di Porto, Edoardo & Tealdi, Cristina, 2022. "Heterogeneous Paths to Stability," IZA Discussion Papers 15246, Institute of Labor Economics (IZA).
    5. Brigitte Granville & Jaume Martorell Cruz, 2016. "Squared Segmentation: How the Insider/Outsider divide across Public/Private Employment shapes attitudes towards markets," Working Papers 78, Queen Mary, University of London, School of Business and Management, Centre for Globalisation Research.
    6. Josué Diwambuena & Raquel Fonseca & Stefan Schubert, 2023. "Labor Market Institutions, Productivity, and the Business Cycle: An Application to Italy," Cahiers de recherche / Working Papers 2302, Chaire de recherche sur les enjeux économiques intergénérationnels / Research Chair in Intergenerational Economics.

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