Ranking and Temporary Jobs in an Equilibrium Matching Model.

This paper examines the effects of tmporary jobs in a matching model with ranking. If firms and workers are uncertain about the worker's actual productivity level at the moment of hiring and if long unemployment durations increase the probability of having low productivity, firms will be reluctant to hire long-term unemployed. But this situation can change if firms are allowed to give the worker first a temporary contract. A necessary and sufficient condition will be derived to determine the firm' preference for a particular contract type..