Are Contingent Jobs Dead Ends or Stepping Stones to Regular Jobs? Evidence from a Structural Estimation

The proportion of part-time, dispatch, and temporary workers has increased in many developed economies in recent years. These workers receive lower average wages and benefits, and are subject to lower employment stability. This paper analyzes the effects of initially taking such jobs on the employment careers of young workers. We build an on-and-off-the-job search model, using Japanese data to perform a structural estimation of the model parameters and simulate career paths, in order to study the effects of the initial choice of employment on the probability of having a regular job in the future and on the welfare of the worker. We find that although contingent jobs are neither stepping stones towards regular employment nor dead-ends, starting a career in a contingent job has a lasting effect on the welfare of the individual in Japan.