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Temporary contracts' transitions: the role of training and institutions

Publication Year 
JEL Code 
E24 - Employment; Unemployment; Wages
J24 - Human Capital; Skills; Occupational Choice; Labor Productivity
J41 - Contracts: Specific Human Capital, Matching Models, Efficiency Wage Models, and Internal Labor Markets
Despite recent reforms, labour market segmentation is still a marked feature of several European countries. This work empirically analyses transitions out of temporary contracts, by means of a discrete duration model, with a particular focus on human capital features, labour market protection and their interaction. Transitions to open-ended contracts with the same or with a new employer are considered separately, as well as transitions to joblessness, based on data for ten European countries taken from the European Community Household Panel. Conclusions suggest that firm training policies are more relevant for intra-firm transitions, while worker characteristics are more determinant for inter-firm transitions. Labour market regulation plays a significant role in what concerns transitions to open-ended contracts, but not to joblessness, particularly in strongly segmented labour markets. In countries characterized by this type of labour market institutions, human capital features assume an increased relevance, and firm provided training may reduce the influence of the strictness of labour market regulations on the conversion of temporary contracts into open-ended.
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