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The determinants of employers’ use of temporary contracts in the frictional labor market
Author(s) -
Masui Makoto
Publication year - 2020
Publication title -
metroeconomica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.256
H-Index - 29
eISSN - 1467-999X
pISSN - 0026-1386
DOI - 10.1111/meca.12303
Subject(s) - matching (statistics) , labour economics , raising (metalworking) , economics , business , engineering , medicine , mechanical engineering , pathology
This paper focuses on the following two primary reasons that employers use temporary contracts: to flexibly adjust employment and to screen workers. A search‐matching framework is used to not only address employers’ endogenous choices in using temporary contracts, but also numerically identify the situations in which these contracts are likely to be used as a screening tool for permanent positions. This numerical exercise demonstrates that reducing employment protections in permanent jobs, reducing benefits for unemployed workers and raising the conversion probability from temporary to permanent employment will increase the relative proportion of employers who use temporary contracts as a screening device.