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Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain

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  • J. Ignacio García-Pérez
  • Judit Vall Castelló
  • 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%).

Suggested Citation

  • J. Ignacio García-Pérez & Judit Vall Castelló & Ioana Marinescu, 2016. "Can Fixed-Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain," NBER Working Papers 22048, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:22048
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    More about this item

    JEL classification:

    • J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
    • J41 - Labor and Demographic Economics - - Particular Labor Markets - - - Labor Contracts
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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