Stepping stones versus dead end jobs: exits from temporary contracts in Italy after the 2003 reform

In this paper we study labour market transitions out of temporary jobs in Italy, focussing on an interesting period in recent Italian history: that immediately following the last labour market reform aimed at flexibilizing and liberalizing the Italian labour market by widespread use of temporary work arrangements in 2003, and immediately preceding the economic downturn starting in the second half of 2007. The data-set used is the 2004-2007 IT-SILC individual panel. We apply a discrete-time duration analysis and estimate a competing-risk model for assessing to what extent, and for whom, starting a temporary job after 2004 results within a two-year span in a stepping stone to permanent employment rather than a dead end outside the labour market or in precarious jobs. We find that temporary contracts have a positive impact only on the transition of men to permanent employment. School leavers, workers in the South, as well as women, are instead somewhat penalized after a temporary job. For women, in particular, longer spells of temporary employment are not matched by a higher probability of finding a permanent contract.