ABSTRACT

It can be expected that the level of economic activity will also influence the amount of fixed-term contracts concluded in a country or an industrial sector. However, there is still little research on this aspect of cyclical variation with regard to kinds ofemployment contracts or growth and productivity effects due to more or less job security. It appears to be an underresearched question whether firms make more use of fixed-term contracts in periods of slack or strong demand for their products. Despite the fact that most legislation on employment protection and fixed-term employment has been enacted promising more jobs in the aggregate to the electorate, economic theories predict that in periods when few new employees are hired the facilitation of fixed-term employment is unlikely to have pervasive effects. In periods with strong labour demand firms tend to employ additional labour to a larger extent but it is unclear whether the legal potential to employ only for a fixed-term contract is really adequate to attract new labour in a booming phase.