Temporary Work in Turbulent Times: The Swedish Experience

CESifo Working Paper No. 671

February 2002

TEMPORARY WORK IN TURBULENT TIMES:
THE SWEDISH EXPERIENCE

Abstract

Sweden has experienced a substantial increase in temporary work over the
1990s, with most of the rise occurring during a severe macroeconomic
recession with mass unemployment. By the early 1990s, workers on fixed-
term contracts accounted for 10 percent of the number of employees; by the
end of the decade they accounted for 16 percent. The paper presents the
Swedish institutional setting, documents basic stylised facts about fixed-term
contracts, and discusses the causes of their increased prevalence. Our
analysis reveals that open-ended and temporary employment exhibit
strikingly different cyclical behaviour with temporary employment being more
volatile. A recession is associated with an initial decline in temporary
employment followed by a sharp rise from the trough to the end of the
recession. We argue that the severe recession of the 1990s is a major factor
behind the rise in temporary work in Sweden. Adverse macroeconomic
conditions make firms more prone to offer fixed-term contracts and workers
more willing to accept them.

Keywords: temporary jobs, labour market dynamics, unemployment.

JEL Classification: J64, E32.

Bertil Holmlund
Department of Economics
Uppsala University
Box 513

SE-751 20 Uppsala
Sweden

[email protected]

Donald Storrie
CELMS
Department of Economics
Box 640

SE-405 30 Goteborg
Sweden

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