TY  - RPRT
        AU  - Porto, Edoardo di
AU  - Tealdi, Cristina
        TI  - Heterogeneous Paths to Stability
        PY  - 2022/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 15246
        UR  - https://www.iza.org/publications/dp15246
        AB  - We investigate how the flexibility of temporary contracts affects the probability of young workers to be upgraded into permanent employment. Theoretically, we explore the workers' career development in response to the change in flexibility within a search and matching model; empirically, we exploit an Italian labour market reform which increased flexibility in a difference in differences framework. We find that new entrants in the labour market who have been affected by the reform experienced a decrease in the conversion rate of approximately 12.5 percentage points in the first months after the reform, and of 5.1 percentage points over a year, compared to unaffected peers. This effect is particularly strong among women and low-educated workers employed in low productive firms in the Center/South of Italy. Worryingly, the lower conversion rate leads to a 25% wage penalty even two years down the workers' career paths.
        KW  - temporary contracts
KW  - young workers
KW  - flexibility
KW  - institutional reforms
KW  - employment protection legislation
        ER  -