Temporary Contracts: An Analysis of the North–South Gap in Italy

Abstract

In Italy, the share of temporary employment varies significantly across regions, with higher averages observed in the South. This paper examines the extent to which the North–South gap relates to different firms’ hiring strategies, or rather that it stems from the evolution and the duration of job contracts. Using a unique source of contract-level administrative data, we analyse entry conditions in the labour market and the evolution of temporary positions. Our results suggest that the greater use of fixed-term contracts in the South is not attributable to differences in firms’ hiring strategies. In fact, workers are initially hired on a temporary basis more frequently in the North. The geographical gap, instead, stems from the lower probability that these temporary positions are eventually converted into an open-ended contract. Furthermore, we observe regional variations in the duration of permanent jobs, with shorter durations in the South. There is evidence suggesting that the subsidies implemented in Italy in 2015-2016 to promote permanent employment had positive effects on contract duration.