Atypical Employment for Young Graduates: Does it represent a Stepping Stone or a Trap?

The main aim of the current paper is to investigate to what extent atypical employment is a stepping stone for a career. Using a rich retrospective dataset on graduates across 13 European Union countries, REFLEX 2005/2006, the paper tests five hypotheses concerning atypical employment. The main hypothesis tested is whether having a first flexible job increases the chances of being trapped in a secondary labour market as predicted by the labour market segmentation theory. The paper finds that having a first atypical job increases the likelihood of having an atypical job five years later, having a PhD and a self employment first job increases the likelihood of having an atypical job five years later. If the firm faces strong competition or the firm is at the forefront of innovation that decreases the relative risk to have an atypical job, however, if the firm faces uncertain demand that increases the odds to have an atypical job five years later. More innovative firms or firms facing strong competition have personnel policies to retain their highly skilled workers, whereas firms facing uncertain demand use atypical contracts as a buffer. Changing sectors increases the chances of being in an atypical job five years later.