As A Free Climber without the Rope: The Climb to the Permanent Work of the New Italian Workers

This paper evaluates the impact of the Italian labour market reforms that have substantially liberalized the fixed term contract and the external collaborators. The debated question is the trade‐off between employment opportunities offered by the deregulation and the employment stability and quality after entry, in particular for the new entrants. Building on previous research, we address the question of whether temporary contractual arrangements are a dead‐end that traps workers indefinitely or just a stepping stone toward more stable and definitive forms of employments. Using micro data of more than 600.000 workers entered the labour market in the years 2008 to 2015 and two different types of temporary contractual agreements (temporary agency and fixed‐term contracts) as treatment, we adopt propensity score techniques to assess which one is more likely to act as a stepping stone towards permanent jobs with respect to a control group. We find significant poor evidence for the stepping stone hypothesis in the short run, with agency workers, though, performing slightly better than fixed term workers in the medium run.