Matching Workers to Jobs in the Fast Lane: the Operation of Fixed-term Contracts

In this paper we look at fixed-term contracts and examine the main features of temporary as opposed to regular employment, keeping the focus on employment careers and wage dynamics of workers employed under fixed-term contracts. Previous work found that fixed-term contracts serve as screening devices for employers. Here it is found that fixed-term contracts serve as search devices for workers, as well. Hence, they can be considered steppingstones to permanent forms of employment. However, if due to a job loss episode, a worker receives at some evolved stage of his or her career a fixed-term contract, there is an indication that both his wage and subsequent employment prospects are severely harmed.