Well-Being and Psychological Consequences of Temporary Contracts: The Case of Younger Italian Employees

Working conditions in Western countries have changed dramatically in the last twenty years, witnessing the emergence of new forms of employment contracts. The number of "standard" fulltime permanent jobs has decreased, while non-standard work arrangements such as temporary, contingent or part-time contracts have become much more common. This paper analyses the impact of temporary contracts and job insecurity on well-being among younger Italian employees. We use the "Health Conditions and Use of the Health Service Survey" carried out by the Italian National Institute of Statistics in conjunction with the Bank of Italy's Survey on Households Income and Wealth (SHIW). We consider four dimensions of individual well-being: physical health, mental health, self-assessed health and happiness. To account for individual heterogeneity we match each temporary worker with a permanent worker using propensity score matching. Well-being of matched individuals is compared to estimates of the average effect of working with a temporary as opposed to a permanent contract. Our analysis reveals a negative relationship between psychological well-being, happiness and having a temporary job and is particularly marked for males. JEL-Classification: I12, J08.