Transitions from Temporary to Permanent Work in Canada: Who Makes the Transition and Why?

Abstract

The focus of this paper is on a microeconomic analysis of the annual transition rate from temporary to permanent work of individual workers in Canada for the period 1999–2004. Given that a large proportion of temporary employment is involuntary, an understanding of the factors associated with the transition to permanent work may inform public policy. Factors associated with the transition, namely, human capital, household structures and labour market segmentation are analyzed using data from the Statistics Canada’s Survey of Labour and Income Dynamics (SLID) for the period 1999–2004, limited to paid workers aged 20–64 years, excluding students. Among the key factors associated with the transitions are younger age and low unemployment rates. The analysis adds to the Canadian and international literature on transitions from temporary to permanent work.

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Notes

  1. 1.

    Estimates for the UK and Spain are from Booth et al. (2002a) and the estimate for the US is from Polikva (1996).

  2. 2.

    Temporary work may be chosen because it offers an opportunity to better balance work and family responsibilities (for a given set of care options and constraints), and in a limited set of circumstances, temporary work may be both high paying and personally rewarding. For the majority of temporary workers, however, this type of work is undertaken involuntarily.

  3. 3.

    It is not possible to estimate the percentage of involuntary temporary workers in Canada because such a question as used in other countries about why workers accept the temporary work is not included the Canadian nationally representative data sets.

  4. 4.

    Note that Australians use the dichotomy of casual and permanent, where casual refers to jobs not covered by standard employment benefits, such as paid sick and holiday leave’. Campbell and Burgess (2001, p. 180) also argue that Australian Bureau of Statistics “data on casual employees underestimate the number and proportion of temporary employees in Australia”.). The term “casual” used in this paper and in other papers using European Labour Force Surveys, refers to a sub-category of the temporary category.

  5. 5.

    This paper complements research at the aggregate level on the relationship between temporary work, unemployment, and employment protection (see, for example, Baker et al. 2004).

  6. 6.

    See also Booth et al. (2002b) for Britain; Blanchard and Landier (2001) for France; Holmlund and Storrie (2002) for Sweden.

  7. 7.

    See Bentolila and Dolado (1994) on the existence of a dual labour market in Spain with permanent workers as insiders and temporary workers as outsiders.

  8. 8.

    The Master File of SLID contains the individual’s employment insurance (EI) region. Information on the annual unemployment rate between 2000 and 2004 for each EI region was provided by HRSDC.

  9. 9.

    The result that older workers are less likely to make the transition to permanent worker than younger workers appears to run counter to a human capital hypothesis that older workers, given their greater labour market experience, should have higher rates of transition to permanent work. On the other hand, employers may be more reluctant to make investment in older workers in temporary work arrangement and offer them permanent positions due to their shorter career horizon for employers to recoup the costs of hiring and training (Hutchens 1986).

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Acknowledgements

The authors thank Workshop participants for helpful comments, especially David Green.

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Correspondence to Tony Fang.

Appendix A

Appendix A

Means for main variables of interest for the whole sample and for sub-samples by gender

Variable Whole sample Male sample Female sample
Female 0.479   
Non-disabled    
Disabled 0.143 0.137 0.150
Not aboriginal    
Aboriginal 0.031 0.029 0.032
Not visible minority    
Visible minority 0.098 0.096 0.100
Age 20–24 0.054 0.056 0.051
Age 25–29 0.107 0.107 0.107
Age 30–39 0.296 0.300 0.293
Age 40–49 0.329 0.324 0.334
Age 50–59 0.189 0.185 0.192
Age 60–64 0.026 0.028 0.023
Single, never married    
Married, common law 0.712 0.721 0.702
Separated 0.037 0.031 0.044
Divorced 0.055 0.040 0.070
Widowed 0.009 0.003 0.015
Number of children 1.553 1.508 1.602
Less than high school grad.    
High school graduate 0.298 0.295 0.301
Non-U. postsecondary certif. 0.348 0.337 0.360
University degree or certificate 0.214 0.208 0.220
Work experience (years) 16.76 0.008 14.720
Ontario    
Newfoundland/Labrador 0.018 0.018 0.018
Prince Edward Island 0.005 0.005 0.005
Nova Scotia 0.033 0.033 0.034
New Brunswick 0.028 0.027 0.030
Quebec 0.252 0.254 0.250
Manitoba 0.037 0.036 0.039
Saskatchewan 0.029 0.028 0.031
Alberta 0.103 0.101 0.104
British Columbia 0.117 0.119 0.115
Rural    
Urban 0–99,999 0.242 0.245 0.239
Urban 100,000–499,999 0.128 0.125 0.131
Urban 500,000 and higher 0.446 0.444 0.448
Management occupation    
Business, finance, admin. 0.201 0.101 0.309
Natural and applied science 0.074 0.114 0.030
Health 0.058 0.016 0.104
Social science 0.076 0.048 0.106
Art, culture, recreation, sports 0.021 0.018 0.024
Sales and service 0.223 0.177 0.274
Trades, transport and equip. op. 0.147 0.263 0.020
Primary occupations 0.022 0.035 0.008
Processing, mfg., utilities 0.092 0.123 0.058
Manufacturing industry    
Agriculture 0.010 0.011 0.008
Forest, fish, mining, oil and gas 0.022 0.035 0.007
Utilities 0.011 0.016 0.005
Construction 0.053 0.091 0.012
Trade 0.142 0.136 0.148
Transportation, warehousing 0.049 0.069 0.027
Finance, insurance, real estate 0.058 0.041 0.077
Prof., scientific, tech. service 0.053 0.054 0.052
Management, admin. support 0.032 0.030 0.034
Educational services 0.079 0.047 0.113
Health and social services 0.112 0.037 0.195
Information, culture, recreation 0.043 0.045 0.041
Accom., food and other services 0.087 0.069 0.107
Public administration 0.072 0.082 0.061
Not multiple job holder    
Multiple job holder 0.085 0.075 0.096
Not covered by agreement    
Covered collective agreement 0.354 0.367 0.340
Earnings from job ($000/year) 34.118 41.000 26.624
Unemployment rate (%) 7.990 8.011 7.967
Family income ($000/year) 61.903 62.994 60.715
Major income earner    
Spouse or common-law partner 0.304 0.122 0.503
Parent of major income earner 0.008 0.005 0.011
Child of major income earner 0.046 0.054 0.038
Other 0.015 0.017 0.014
Firm size 1–19    
Firm size 20–99 0.169 0.174 0.164
Firm size 100–499 0.144 0.150 0.138
Firm size 500–999 0.075 0.074 0.076
Firm size over 1000 0.348 0.355 0.339
Number of observations 62,000 31,215 30,785

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Fang, T., MacPhail, F. Transitions from Temporary to Permanent Work in Canada: Who Makes the Transition and Why?. Soc Indic Res 88, 51–74 (2008). https://doi.org/10.1007/s11205-007-9210-7

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Keywords

  • Transition rates
  • Temporary
  • Permanent jobs
  • Labour market flexibility
  • Canada