1 The Transition from Temporary to Permanent Employment: Evidence from Tuscany Marco Guerrazzi Department of Economics University of Pisa IKD Seminar Series – The Open University Milton Keynes, April, 19 th, 2007

2 Aims of the Paper Provide a probabilistic evaluation of the transition from temporary to permanent employment in a regional context. Assess the effect that an initial employment status has in determining the final outcomes. Establish the effect that others social-economics variables have on the transition toward the final employment status.

3 Related Literature Alba-Ramìrez (1998), How Temporary is Temporary Employment in Spain?, JLR Booth, Francesconi and Frank (2002), Temporary Jobs: Stepping Stones or Dead Ends?, EJ Zijl, Heyma and van den Berg (2004), Stepping Stones for the Unemployed? Effects of Temporary Jobs on the Duration Until Regular Work, IZA DP

4 The Sample An IRPET survey carried out in 2004 on 1869 workers that in 2000 held a “ flexible ” position. Workers were chosen from 5 different districts: ( i ) Florence, ( ii ) Santa Croce, ( iii ) Borgo San Lorenzo, ( iv ), Rosignano, ( v ) Follonica. For each worker it is possible to know (among the other things) the age, the gender, the contractual form, the years of education, the marital status, the previous unemployment experiences, etc.

5 Again on the Sample Labour force participation options: - out of the labour force (OUT) - self-employment (SELF) - paid-employment (PAID) Employment outcomes for salaried workers: - permanent job (PE) - fixed-term job (FT) - apprenticeship & training (A&T) - unemployed (UNEMP)

6 The Nested Decision-Making Model

7 An Overview of the Results Base-Agent : single male aged 34 years old, holding a fixed-term contract in services in 2000, working in the Florence area with a high school diploma that experienced a short period of unemployment in the period

8 The Decision of the Worker IN/OUTSELF/PAID Gender yes PPT FTPT A&T yes no yes no yes no No Unemployment Long Unemployment no yes no Borgo San Lorenzo Santa Croce Follonica Rosignano no yes no yes no yes Age yesno Education yes Agriculture Manufacturing Retail Accomodation & Food yes no yes no Marriage yesno

9 The Decision of the Firm Hired/not HiredContractual Form Gender noyes PPT FTPT A&T no yes no yes No Unemployment Long Unemployment no yes Borgo San Lorenzo Santa Croce Follonica Rosignano no yes no Age noyes Education yes Agriculture Manufacturing Retail Accomodation & Food no yes no yes no Marriage noyes

10 Figure 2: Probability to obtain a permanent job

11 Figure 3: Probability to obtain a temporary job

12 The Role of Education Figure 4: Effect of an additional year of education on the stabilisation probability

13 Again on the Role of Education Figure 5: Effect of an additional year of education on the probability to become unemployed

14 Some Considerations on the Different Contractual Arrangements Figure 6: The probability to obtain a permanent job with different contracts

15 Conclusions The stabilization probability for our base-agent is 61, 63%. This value displays significant variations across workers’ characteristics. A precariousness trap may be an actual possibility, especially for women and older workers. Higher levels of education leads to less unemployment but more precariousness.