Dignity by Decree? Temporary Jobs Reforms and Workers' Wages

Abstract

In recent years, several European countries have modified policies concerning temporary employment contracts, oscillating between liberalizations and restraints in a bid to balance employment flexibility and job stability. We study the effects of a 2018 reform that tightened fixed-term contracts legislation on wage dynamics. Our analysis, grounded in extensive administrative data tracking within-firm, within-individual transitions from fixed-term to permanent contracts in Italy, unveils a significant decline in the wage premium accompanying contract conversions post-reform.