Temporary contracts and transitions to stable jobs in Italy

This paper evaluates whether and to what extent temporary jobs have been springboards to stable jobs in Italy. Using the 2000, 2002, and 2004 waves of the Survey of Italian Households' Income and Wealth, several dynamic unobserved effects probit models for the probability of having a permanent job are estimated. The main result is that a temporary job, rather than unemployment, significantly increases the probability of having a permanent job 2 years later by about 13.5-16 percentage points. The robustness of this stepping-stone effect is then assessed relaxing parametric assumptions on the unobserved individual heterogeneity distribution.