Why is the rate of temporary employment so high? Spain in a comparative context

Abstract

This study analyses the determinants of the rate of temporary employment in 15 OECD countries using both macro-level data drawn from the OECD and EUROSTAT databases, as well as micro-level data drawn from the 8th wave of the European Household Panel. The analysis shows that, contrary to the view held by a large part of the sociological literature, the high levels of temporary employment observed in Spain cannot be explained by the characteristics of its productive structure. As an alternative, two types of supply-side factors are tested: crowding-out effects and intergenerational gaps in education. Both
seem also ill-suited to explain the distribution of temporary employment across the economies analysed. Institutional factors do, however, matter. Parametric analyses show that both the levels of institutional protection in standard employment during the 1980s and the degree of coordinated centralization of the collective bargaining system seem to have a significant impact on the distribution of temporary employment in the countries examined. Yet institutional factors alone cannot explain the
extreme levels of temporary employment observed in Spain. The Spanish «difference» disappears, however, once an interaction between employment protection for standard contracts and the occurrence of severe unemployment crises is fitted to the data. Such interaction is expected from a theoretical standpoint and proves highly consistent with previous evidence for the Spanish case.