This study examines the effect of regulation on the use of fixed-term contract workers on various outcome. In particular, the “Act on the Protection on Fixed Term and Part-time Workers,” in 2007, limited the maximum duration of fixed-term contract to two years.

In the first chapter, we explore how the fixed-term contract workers’ probability of being converted to regular workers or leaving the current employer changes with tenure. We find that the probability of being separated with current employer increases right before the maximum duration of a fixed-term contract. However, there is a heterogeneity in the increase across the size of the establishments and sector. In particular, we find a larger increase the probability in establishment with more than 100 workers, establishment with labor union, and in public and manufacturing sector. The results thus suggest that the potential negative impact of the regulation would be concentrated in the larger firms. Furthermore, we find that fixed-term contract workers’ cumulative probability of conversion to regular workers during the two years of tenure is small―only 3.7%. Moreover, although they are automatically regarded as “indefinite contract workers” by the law after two years of tenure, the improvements on training, severance pay and other labor conditions are minimal. Thus, our result suggest the fixed-term contract and regular workers are widely separated in South Korea.

In the second chapter, we conduct a survey to examine how the business would respond to the increase in the maximum duration of fixed-term contract to four years. Specifically, we survey firms’ hypothetical response to the increase in the maximum duration of fixed term contract. The empirical results suggest that the conversion of fixed-term workers to regular workers depend on labor flexibility. In particular, regardless of the length of maximum duration, business that lack labor flexibility would less likely to convert fixed-term workers to regular workers and more likely to terminate the contract. Furthermore, more than 90% of the firms respond that the increasing the maximum duration would not change the conversion rate of fixed-term workers to regular workers. However, we also find suggestive possibility that for the business with lack of labor flexibility, increase in maximum duration of fixed-term contract would increase the conversion rate.

In the final chapter, we examine the impact of the law on workers’ welfare which has been overlooked by previous literature despite its importance. Specifically, we examine the impact of conversion to “indefinite contract workers” on health outcome of the fixed-term workers. The empirical analysis suggest that the fixed-term workers experience improvement on subjective job security and health after being converted to “indefinite contract workers.” These improvement is more prominent among workers in establishment with more than 100 workers and among college graduates. However, we do not find any changes in behaviors such as smoking, drinking and excercise that can affect health outcomes. Furthermore, we do not find evidence supporting the improvement in wage and working hours after the conversion to “indefinite contract workers.” The result, thus suggest that the law improved subjective well-being of workers despite its limited impact on objective working conditions.

Preface
Executive Summary

Chapter 1 Current Status of Fixed-Term Employment: Labor Mobility and Employment Type Changes (Yoonsoo Park, Seik Kim)
　Section 1 Introduction
　Section 2 Institutional Background
　Section 3 Literature Review
　Section 4 Data for Analysis
　Section 5 Empirical Analysis
　Section 6 Summary and Conclusion
　References
　Appendix

Chapter 2 Expected Effects of Extending the Maximum Duration of Fixed-Term Contracts (Yoonsoo Park, Wooram Park)
　Section 1 Introduction
　Section 2 Fixed-Term Employment: A Stepping Stone or a Trap?
　Section 3 Survey Analysis
　Section 4 Empirical Analysis
　Section 5 Summary and Conclusion
　References
　Appendix

Chapter 3 Impact of Conversion to Indefinite Contract Workers on Employee Welfare: Focus on Subjective Health and Job Security (Wooram Park)
　Section 1 Introduction
　Section 2 Institutional Background
　Section 3 Literature Review
　Section 4 Data and Empirical Model
　Section 5 Empirical Analysis Results
　Section 6 Conclusion
　References

ABSTRACT