Flexible job rules backfire: young workers lose wage prospects for years
Governments' attempts to boost permanent jobs through incentives fail when temporary contracts lack protections, new data shows. Workers hired on looser terms see conversion rates drop 6.3 percentage points—and face 17% wage penalties two years later, suggesting policy design matters as much as its intent.
Originaltitel: Heterogeneous paths to stability
<p>In this paper, we show that incentives to convert temporary contracts into permanent ones might be less effective when the employment protection legislation associated with temporary contracts is lax. Drawing upon rich administrative data and using a difference-in-differences methodology, we estimate that workers at their first work experience hired on more flexible contracts undergo a reduction in the conversion rate to permanent employment of 6.3 percentage points after the implementation of the incentives (and of 3.2 percentage points over a year), compared to peers hired on more rigid contracts. This reduced conversion rate, which results in a 17% wage penalty even 2 years into their professional journey, points to a significant negative impact of flexible temporary jobs on the future prospects of young workers.</p>