Are Casual Jobs a Freeway to Permanent Employment?

This study examines whether casual work can shorten 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. Hazard rate models are used 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 accepting casual work is beneficial for some unemployed people in their search for permanent work. † We would like to thank Bob Breunig, other participants of the “Panel Data and Policy Conference” (May 2000) in Canberra and people at the Melbourne Institute’s Monday workshop (July 2000) for their comments. However, the authors are responsible for any remaining errors.