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The Adverse Effects of Short‐term Contracts on Young Workers: Evidence From Italy
Author(s) -
Tealdi Cristina
Publication year - 2019
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12265
Subject(s) - flexibility (engineering) , economics , productivity , labour economics , term (time) , matching (statistics) , offset (computer science) , turnover , value (mathematics) , business , microeconomics , macroeconomics , computer science , programming language , physics , quantum mechanics , statistics , mathematics , management , machine learning
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.