Fixed-term contracts and firm productivity: Do workers' skills and firm conversion rates from fixed-term to permanent contracts matter?

Ngoc Han Nguyen*, Wendy Smits, Mark Vancauteren

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

Purpose - We aim to elucidate the relationship between fixed-term employment and firm productivity by examining workers' skills and considering how firm-level conversion rates influence this relationship. Design/methodology/approach - We use longitudinal employer-employee data between 2011 and 2017 in the Netherlands to estimate a nonlinear regression derived from a production function proposed by Addessi (2014) and Castellani et al . (2020). Findings - The contribution of fixed-term contracts to firm-level productivity is less than that of permanent contracts. However, this contribution is greater when firms exhibit a high conversion rate from fixed-term to permanent positions. The effect of the conversion rate is more substantial for high-skilled fixed-term workers than for low-skilled ones. Originality/value - Our results suggest the extent to which firms benefit from fixed-term contracts when these are used for screening high-skilled workers for permanent employment.
Original languageEnglish
Pages (from-to)144-161
Number of pages18
JournalInternational Journal of Manpower
Volume45
Issue number10
DOIs
Publication statusPublished - 5 Nov 2024

Keywords

  • Productivity
  • Firm-level TFP
  • Labour contracts
  • Screening
  • Conversion rate
  • Worker skills
  • Panel data
  • LABOR-MARKET REFORM
  • TEMPORARY EMPLOYMENT
  • FLEXIBILITY
  • PERFORMANCE
  • CONSEQUENCES
  • INNOVATION
  • DYNAMICS
  • CREATION
  • LEVEL
  • JOBS

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