Why do firms use fixed-term contracts?

Pedro Portugal, José Varejão

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)

Abstract

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 newly-hired temporary employees. Our results indicate that fixed-term contracts are a mechanism for screening workers for permanent positions.
Original languageEnglish
Pages (from-to)401–421
JournalPortuguese Economic Journal
Volume21
Early online date30 Jul 2022
DOIs
Publication statusPublished - Sept 2022

Keywords

  • Fixed-term contracts
  • Adjustment costs
  • Labor demand

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