The Influence of Temporary Employment on Unemployment Exits in a Competing Risks Framework

Using Spanish longitudinal data from the period 1992–2004, this paper examines labour market transitions of the newly unemployed in order to investigate the determinants of unemployment duration in a competing risks framework with four destination states: temporary employment, permanent employment, self-employment and inactivity. Special emphasis is placed on the influence of previous job variables. We find that individuals who become unemployed due to the end of a temporary contract are more likely to exit unemployment by finding another temporary job and less likely to exit through permanent jobs, self-employment or inactivity. However, long tenures in temporary jobs enhance the probability of finding a permanent employment. Moreover, the length of the previous job, when it terminates due to a layoff, hinders the probability of moving to employment (either permanent or temporary).