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The Hidden Side of Temporary Employment: Fixed-term Contracts as a Screening Device
J23 - Employment Determination; Job Creation; Demand for Labor; Self-Employment
J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
In this article we look at how one specific form of temporary employment - employment with fixed-term contracts - fits into employers’ hiring policies. We find that human capital variables, measured at the levels of the worker and the workplace, are important determinants of the employers’ decisions to hire with temporary contracts and to promote temporary workers to permanent positions. Those employers that hire more with temporary contracts are also those that are more likely to offer a permanent position to their newlyhired temporary employees. Our results indicate that fixed-term contracts are a mechanism for screening workers for permanent positions.