Temporary Employment and Labour Market Outcomes

Over the last twenty years, the Italian labour market experienced several changes in the regulation of temporary contracts, towards more flexible arrangements. Consequently, temporary workers account for an increasing share of employees and in recent years, temporary contracts make up the bulk of new hires, with the use of temporary employment particularly pronounced for young workers.

The project aims at evaluating the causal impact of temporary contracts on future labour market outcomes versus both a spell of unemployment and a spell of permanent employment, from 2007 onwards.

We identify the causal effect imposing that, conditional on a suitable set of observable characteristics, the treatment status (temporary job) is ignorable for the outcome, and we build a placebo test to validate the ignorability assumption. Then, we propose a new methodology to estimate the remaining selection bias due to the omission of a known variable, which can be observed together with the treatment status but not with the outcome.