Transitions into Permanent Employment in Spain: An Empirical Analysis for Young Workers

This article analyses the transitions into permanent employment of a sample of young temporary employees in Spain for the period 1996-2003. For this purpose, we apply multiple-spell duration techniques to a longitudinal dataset of temporary workers obtained from Social Security registers. Our main findings are as follows. First, the transitions from a temporary contract into unemployment and into another temporary contract are very high when compared with transitions into permanent employment. Second, the entry into permanent employment - although slightly increasing with tenure at the temporary contract - is very low; the only exception is that of semi-skilled and unskilled individuals, who are particularly likely to enter into permanent employment at the 24th and the 36th month of tenure (respectively). Third, we find that there exists a substantial proportion of workers with unobservable characteristics that make them show high exit rates from temporary employment and, at the same time, a rapid exit from unemployment - while the remaining individuals exit from unemployment more slowly, particularly those who are receiving unemployment benefits.