Labour Supply and Incentives to Work in Europe

Labour Supply and Incentives to Work in Europe

Edited by Ramón Gómez-Salvador, Ana Lamo, Barbara Petrongolo, Melanie Ward and Etienne Wasmer

Labour Supply and Incentives to Work in Europe highlights recent developments in the labour supply in Europe and gives a detailed assessment of their link with economic policies and labour market institutions. Despite major changes in European labour supply during the past few decades, the existing literature still lacks a comprehensive study of the relationship between labour supply and labour market institutions from a macro perspective.

DISCUSSION

Julián Messina

Subjects: economics and finance, labour economics

Extract

Julián Messina In this chapter José Varejão and Pedro Portugal study the consequences of employers’ use of fixed-term contracts for workers’ employment and wage dynamics in the Portuguese economy. The analysis relies on data from a representative household survey spanning from the first quarter of 1998 to the third quarter of 2000. The topic is of major relevance in the current European policy debate, which is characterized by the opposing views of those who consider fixedterm contracts as ‘stepping stones’ to more stable employment relationships, and those who view fixed-term contracts as synonyms of low quality jobs or ‘dead-ends’, characterized by high insecurity and little training. The chapter is well written and focused and the analysis is well executed. My discussion will be divided into three parts. First I will briefly put into an international context the Portuguese situation regarding the regulation of fixed-term and open-ended contracts. Second I will describe the characteristics of the analysis performed by the authors and discuss their main findings. Finally I will discuss their empirical strategy and suggest a number of directions in which the analysis could be extended and possibly improved. Fixed-term contracts might be used by employers for a variety of reasons: to engage workers in seasonal or casual work duties, as a buffer stock to economic fluctuations or as a screening device. The first type of jobs may not easily lend themselves to permanent contracts, while in principle the second and third set of motivations could be...

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