Fixed term contracts and employers’ human capital. The role of educational spillovers

This paper analyzes the role of the employers’ education on the spread of temporary contracts. Taking advantage of a unique firm-level dataset, we test whether the share of fixed term workforce in a firm is affected by the employer’s level of education. Furthermore, we test whether knowledge spillovers arising from the agglomeration of university graduate employers affect the incidence of temporary employment in the firms located in the area. In both cases we find a negative effect. Interestingly, only small firms are influenced by the spillovers. The possible problems of endogeneity of the agglomeration variable are coped with an IV approach.