Fixed‐Term Contracts: Short‐Term Blessings or Long‐Term Scars? Empirical Findings from the Netherlands 1980–2000
| Published date | 01 March 2015 |
| DOI | http://doi.org/10.1111/bjir.12024 |
| Date | 01 March 2015 |
Fixed-Term Contracts: Short-Term
Blessings or Long-Term Scars? Empirical
Findings from the Netherlands 1980–2000
Irma Mooi-Reci and Ronald Dekker
Abstract
Using a comprehensive longitudinal dataset of prime-age Dutch workers over
the period 1980–2000, we examine how a previously held job with a fixed-term
contract influences both the likelihood and the duration of a future spell of
unemployment. Analyses show that Dutch workers with fixed-term contracts
experience higher risks of future unemployment and have no shorter spells of
unemployment compared to workers with regular contracts. Results also reveal
that swifter employment re-entries among men with fixed-term contracts can be
explained by their job search efforts before unemployment. Our study (partly)
invalidates theoretical positions that claim that fixed-term contracts foster
employment security by shortening unemployment durations; suggesting that
fixed-term contracts are a short-term blessing that could end, for some workers,
in a recurrent unemployment trap.
1. Introduction
In the labour market literature, fixed-term contracts have become an
important topic in the study of job insecurities and labour market inequali-
ties. Fixed-term contracts refer to labour contracts with a known expiration
date. Increasingly, researchers have focused on investigating the risks and
opportunities associated with this ‘non-standard’ type of contract, the use
of which has experienced an explosive rise in the United States and many
western European countries since the 1980s. It is therefore not surprising
that by now, a growing body of both theoretical and empirical research
has emerged on the effects of fixed-term contracts on workers’ career out-
comes (Abowd et al. 1999; Amuedo-Dorantes 2000; Autor and Houseman
Irma Mooi-Reci is at the School of Social and Political Sciences (SSPS), The University of
Melbourne. Ronald Dekker is at the ReflecT, Tilburg University.
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British Journal of Industrial Relations doi: 10.1111/bjir.12024
53:1 March 2015 0007–1080 pp. 112–135
© Blackwell Publishing Ltd/London School of Economics 2013. Published by John Wiley & Sons Ltd,
9600 Garsington Road, Oxford OX4 2DQ, UK and 350 Main Street, Malden, MA 02148, USA.
2005; Booth et al. 2000; García-Perez and Munoz-Bullon 2011; Kalleberg
2000; McGinnity et al. 2005; Segal and Sullivan 1997; Zijl 2011; Zijl et al.
2004).
A prevailing assumption among labour market analysts and flexicurity
policy makers (e.g. Wilthagen and Tros 2004) is that recurrent spells of
unemployment among workers with previously fixed-term contracts should
be shorter because contractual flexibility fosters employment growth and
acts as a stepping stone towards regular work (for an overview, see Ichino
et al. 2006; see also Blossfeld 1997; Bover et al. 2002; Mertens and McGinnity
2004; Zijl et al. 2004). This stems from the idea that unemployed workers
accept jobs with fixed-term contracts sooner when jobs with permanent ones
are currently not available to them (counterfactual approach: Zijl et al.
2004). Although a central element in the public and academic debate since the
introduction of fixed-term contracts, surprisingly little is known about the
relationship between a previously held labour contract(s) and workers’ sub-
sequent spells of unemployment. Do workers with previous fixed-term con-
tracts experience shorter subsequent spells of unemployment? And if so, is
this disparity in the subsequent re-employment rates related to the variation
in individual — and job — characteristics or to workers’ variations in job
search behaviour?
These questions will be the starting point of our study, which presents an
alternative approach to understanding the circumstances under which fixed-
term contracts reduce or introduce future unemployment spells. Our hypoth-
eses will be tested using a comprehensive longitudinal dataset from the Dutch
Labour Supply Panel (OSA) spanning the period 1980–2000. The data
contain rich information about workers’ labour contracts and their indi-
vidual differences regarding previous tenure, earnings and job search behav-
iour that predate their unemployment experience but are crucial in
determining the duration until subsequent re-employment and workers’ risk
of future unemployment.
The empirical strategy followed in this study is two-fold. First, we apply
(dynamic) life event history models to examine workers’ unemployment
duration gap until re-employment after their contract terminates (short-term
effects). This approach provides a more appropriate way to test whether
workers with previously fixed-term contracts experience shorter spells of
unemployment relative to workers who had a permanent contract initially.
Second, we apply a random-effect dynamic model to examine whether the
risk of subsequent unemployment spells varies between workers with a pre-
vious fixed-term contract compared to those with a previous regular contract
(long-term effects).
This study is structured as follows. First, Section 2 portrays briefly the
context in which fixed-term contracts are embedded in the Dutch labour
market. This is subsequently followed by Section 3, which develops hypoth-
eses regarding the effects of fixed-term contracts on workers future unem-
ployment risk and duration. In Section 4, the data, empirical approach and
measurements are described, and our hypotheses are subsequently tested in
Fixed-Term Contracts: Short-Term Blessings or Long-Term Scars? 113
© Blackwell Publishing Ltd/London School of Economics 2013.
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