Fixed-term contracts as screening devices : causal evidence in a two-tier system

Abstract

The purpose of this dissertation is to access the impact stricter employment protection legislation on the use of fixed-term contracts as a screening device. To achieve this, I first confirm the results found by Centeno and Novo (2012) on the impact of the 2004 labor code reform over excess worker turnover and the share of fixed-term contracts on Portuguese firms, and then explore the link between those indicators and the transition of fixed-term to open-ended contracts. While the link between more stringent employment protection legislation and a higher reliance on fixed term contracts seems clear, the strategy of using fixed-term contracts as a screening device appears to be persistent, and more affected by idiosyncratic factors than external policy changes.