Evaluation of internship contract in Spain

other

Sara de la Rica Lucía Gorjón

abstract:

The internship contract (IC) was originally designed to promote an appropriate
employment transition for young people with higher education from their formative
years to their working lives. Employers are supposed to invest in human capital and, in
correspondence, they can benefit from lower wages and from tax reductions. This
report evaluates the impact of this Active Labor Market Policy. The evidence shows that
the use made of the IC is contrary to the spirit of the law. First, employment under the
IC reduces the probability of being retained by the firm; second, for those who stay in
the firm after the IC, their probability of signing an indefinite contract is significantly
lower than that for those who sign another temporary contract. However, for those who
move to another firm, the probability of signing an indefinite contract is higher if they
come from an IC. These results suggest that firms do not use IC as an instrument for
investing in training young people, but rather as an instrument for reducing labour costs
and/or increasing contractual flexibility.

Evaluation of internship contract in Spain

keywords: labour market policy evaluation, internship

JEL codes:

year: 2021

language: English

thematic categories: policy evaluation

publishing series:

publication number: 05/2021

ISSN:

additional information:

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