When Does the Stepping‐Stone Work? Fixed‐Term Contracts Versus Temporary Agency Work in Changing Economic Conditions

Abstract

This paper emphasizes differences among short-term contracts in terms of career prospects. Using French data over the 2002-2010 period, we rely on a dynamic model with fixed effects to disentangle state dependence from unobserved heterogeneity. Although fixed-term contracts may provide a 'stepping-stone' to permanent positions, temporary agency work is hardly better than unemployment in this regard. The Great Recession of 2008 has changed the dynamics on the labor market and amplified the difference between fixed-term contracts and temporary agency work. For both types of temporary workers, providing overtime work does not significantly increase the transition to permanent employment.

Labor Market Reforms, Temporary Workers and Wage Inequality

“…Booth et al . () and Givord and Wilner () reach similar conclusions using UK and French data. Givord and Wilner find that the transition rate from temporary employment to a permanent position is slightly higher when workers perform overtime work; Booth et al .…”

As A Free Climber without the Rope: The Climb to the Permanent Work of the New Italian Workers

“…More recently, Fremigacci and Terracol (2013) considered the effect of a subsidization program for temporary jobs finding contrasting results: in particular, they found a significant lock-in effect when people work part-time, while there's a stepping stone effect when they work full-time. Again for France, Givord and Wilner (2015) found that fixed term contracts increase the likelihood to get a permanent contract, performing better than unemployment in this case, but the same does not hold for temporary agency contracts, from which it is much harder to flow into a permanent jobs. Positive evidence for a stepping stone effect is found by Cockx and Picchio (2012): for young Belgian workers, they find that the positive impact of past employment on subsequent employment is larger than that of past unemployment on subsequent unemployment, although in their simulation they find that in the short run, short-lived jobs are not stepping stones.…”

Youth employment security and labour market institutions: A dynamic perspective

“…In some countries -such as Austria, Germany, Sweden, the Netherlands and the United Kingdom -temporary contracts can serve as a stepping stone to more stable and better-paid jobs (European Commission, 2010, pp. 140-142;de Graaf-Zijl, van den Berg and Heyma, 2011), in other countries -such as Spain, Italy and Greece, but also France and Poland -temporary jobs are seen as traps, from which there is little chance of escaping (D'Addio and Rosholm, 2005;Ichino, Mealli and Nannicini, 2008;Berloffa, Modena and Villa, 2014;Givord and Wilner, 2015). These results suggest that, in some countries, the job insecurity associated with the use of temporary contracts is limited to the first few years of labour market entry, after which the individual enjoys the job security associated with permanent contracts.…”