The Transition from Unemployment to Work: are Casual Jobs a Short Cut to Permanent Employment?

Abstract

This study examines the effect of casual work in shortening the time taken to move from unemployment into permanent work using longitudinal data from the Survey of Employment and Unemployment Patterns. The analysis is based on comparison of the transition rate from unemployment to permanent work with the combined transition rates of unemployment to casual work and casual work to permanent work. We use hazard rate models to estimate each of the transition rates. The models include observed and unobserved heterogeneity and allow for correlation between the transition rates. The evidence presented suggests that disadvantaged unemployed people can benefit from accepting casual work in their search for permanent work, although they are still less likely than others to obtain permanent work.