Dreaming of a Permanent Job: The Transitions of Temporary Workers in Italy and Spain

Abstract

Aim of this paper is to shed further light on the transitions of temporary workers towards stable employment in Italy and Spain. The analysis is focused on the transitions of involuntary temporary workers (i.e., those choosing to work on a fixed-term basis only because they could not find any permanent job), comparing their performance with both voluntary temporary workers and the unemployed. The share of involuntary temporary employment is in fact particularly relevant both in Italy and Spain (respectively, 41% and 70% of total temporary workers aged 15-64, against the EU average around 34% in 2002), despite the different incidence of overall temporary work. The institutional similarity between Italy and Spain (tight labour market regulation, extended family networks with low female participation rates, relevant internal regional differences), accompanied by quite different policies for (and subsequent use of) temporary employment, represent an interesting ground to study the transitions of temporary workers towards more stable jobs. The empirical analysis, based on longitudinal micro-data from the Italian and the Spanish Labour Force Survey, actually reveals two different models. Italian unemployed are in fact less likely to find a job than the Spanish unemployed, but the first are more likely to get a stable job than a temporary one. Furthermore, temporary employees in Italy are characterized by a significant probability to get a stable job and a relatively low probability to fall into unemployment. On the contrary in Spain the unemployed are more likely to find temporary jobs rather than remaining in their initial state, but once there they seem to be stuck. Econometric estimates point out that temporary workers in both countries are actually more likely to get a stable job than the unemployed, while no significant differences seem to emerge between involuntary and other temporary employees. Nonetheless, the marginal effect of temporary work experience (holding other factors constant) is much higher in Italy than in Spain (0.25 vs 0.03). Furthermore, the positive effect of temporary work experience may be lower if endogeneity of the initial condition is taken into account, suggesting that temporary workers are from the beginning “stronger” than the unemployed and for this reason, rather than for the temporary work experience itself, they are more likely to get a permanent job.