Temporary Work in Turbulent Times: The Swedish Experience

27

of wage and salary employment in Norway. In Finland, by contrast, the share of temporary
workers among employees increased sharply during the 1990s. The share stood at 12 percent in
1989 and peaked at 18.4 percent in 1997. The share fell slightly over the period 1997 - 2000 and
had reached 16.4 percent in 2000.¹⁸ Changes in labour law appear to have little to do with this
Finnish development. We take the outcomes of these large-scale “natural experiments” as
additional evidence supporting our argument that adverse labour market conditions can trigger a
rise in temporary employment.

6. Concluding Remarks

The paper has documented and discussed the remarkable rise in temporary work that has taken
place in Sweden during the 1990s. What has been driving this rise? As emphasized in the paper,
there is little reason to expect legislative changes to be important. A more promising explanation
focuses on the consequences of adverse macroeconomic conditions. We have found that a
recession is associated with relatively more hirings on temporary contracts, presumably
reflecting stronger incentives on part of firms to offer short-term jobs when workers are easier to
find as well as an increased willingness on part of workers to accept temporary work when job
offers in general are in short supply. The Swedish experience as well as the developments of
temporary work in the other Nordic countries lends support to this hypothesis.

Further research on temporary work should preferably make use of more disaggregate data,
including micro data. For example, micro data will be indispensable in one wants to understand
the role of temporary jobs as an entry port to permanent employment. We have noticed that the
probability of entering into a permanent job, conditional on being in a temporary one, is not
markedly different today (2000) than it was a decade earlier. For the unemployed, however, the

¹⁷ Persson (1999) reports that the job reallocation rate, i.e., the sum of job creation and destruction rates, is of the
same order of magnitude in 1995 as in the late 1980s. We are unaware of any study of job turnover that includes
data for the second half of the 1990s.

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