Are temporary jobs a port of entry into permanent employment?

Abstract

PurposeThis paper seeks to explore whether temporary jobs are a port of entry into permanent employment and to argue that the answer crucially depends on the type of temporary contracts being considered.Design/methodology/approachThe paper bases its empirical evidence on a longitudinal sample of labour market entrants in Italy and estimates dynamic multinomial logit models with fixed effects to allow for the non‐random sorting of workers into the different types of contracts.FindingsThe authors show that the transition to permanent employment is more likely for individuals who hold any type of temporary contract than for the unemployed, thus broadly confirming the existence of port‐of‐entry effects. Yet, not all temporary contracts are the same. An order among non‐standard contracts with respect to the probability of taking an open‐ended job emerges, with training contracts at the top, freelance work at the bottom, and fixed‐term contracts outperforming apprenticeships. Strong SSC rebates, lack of training requirements, and low legal constraints concerning renewals result in poor port‐of‐entry performance, as in the case of freelance contracts. Instead, mandatory training and more binding legal constraints on the use, extension, and renewals of training contracts tend to enhance the probability of getting a standard job.Originality/valueMost of the existing empirical literature aggregates temporary contracts in a single category, thereby ignoring a relevant source of heterogeneity.