Can Fixed Term Contracts Put Low Skilled Youth on a Better Career Path? Evidence from Spain
By reducing the commitment made by employers, fixed term contracts can help low skilled youth find a first job. However, the long term impact of fixed term contracts on these workers' careers may be negative. Using Spanish social security data, we analyze the impact of a large liberalization in the regulation of fixed term contracts in 1984. Using a cohort regression discontinuity design, we find that the reform raised the likelihood of male high school dropouts working before age 19 by 9% However, in the longer run, the reform reduced number of days worked (by 4.5% and earnings (by 9%