Jaramillo, Miguel y Daniela Campos (2019). ¿Son los contratos temporales un peldaño hacia un contrato por tiempo indeterminado? Documento de Investigación, 93. Lima: GRADE.

During the last decades, the use of fixed-term contracts has grown around the world, a phenomenon that has gone hand in hand with reductions in the probability of obtaining a contract for an indeterminate period of time. Fixed-term contracts could be used as a means to assess the skills of new workers before they are hired indefinitely. In this framework, the study addresses two tasks. The first is to evaluate the extent to which temporary contracts are functioning as a step towards employment with an indefinite contract (conversion). The second is to test the hypothesis that the use of temporary contracts is associated with an evaluation of worker productivity by the employer (screening). To do this, we used a longitudinal database of workers and companies in which they work: this base refers to Peru for the first half of this decade.

The findings show that fixed-term contracts are not functioning as a step leading to contracts for an indefinite period. Likewise, close to half of contract conversions are associated with a direct worker screening process. Finally, the patterns related to the moment in which conversions take place and the characteristics of the workers who receive them suggest that the companies that perform them act guided by a rationality associated with avoiding the high costs of dismissal.