Optimal effort on a temporary job

In this paper I consider the optimal choice of on-the-job effort exerted by an individual who has a temporary job and would like to find another job with undetermined duration. This situation is quite common for new entrants in the labor market. They are often faced with the choice between exerting a lot of effort on the temporary job, in order to increase current earnings, or spending valuable time to look for a more stable job.
I build a two-period model that yields a simple solution for optimal effort as a function of variables with an immediate economic interpretation. I show that optimal effort on the temporary job is increasing in the responsiveness of wage to effort, and, perhaps more instructively, it is decreasing in the incidence of labor market regulations like minimum wage or occupation-specific minimum tariffs.

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