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The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France

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  • O Blanchard
  • A Landier

Abstract

We argue that the effects of a partial reform of employment protection by allowing firms to hire workers on fixed--term contracts may be perverse. The main effect may be high turnover in entry--level jobs, leading to higher, not lower, unemployment. Even if unemployment falls, workers may be worse off, going through many spells of unemployment and entry--level jobs, before obtaining a regular job. Considering French data for young workers since the early 1980s, we conclude that the reforms have substantially increased turnover, without a substantial reduction in unemployment duration. If anything, the effect on their welfare appears to have been negative. Copyright 2002 Royal Economic Society

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 112 (2002)
Issue (Month): 480 (June)
Pages: F214-F244

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Handle: RePEc:ecj:econjl:v:112:y:2002:i:480:p:f214-f244

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  1. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
  2. Thierry Magnac & Michael Visser, 1998. "Transition Models with Measurement Errors," Working Papers 98-22, Centre de Recherche en Economie et Statistique.
  3. Ricardo J. Caballero & Mohamad L. Hammour, 1996. "The "Fundamental Transformation" in Macroeconomics," NBER Working Papers 5471, National Bureau of Economic Research, Inc.
  4. Maia Güell & Barbara Petrongolo, 2000. "Workers Transitions from Temporary to Permanent Employment: the Spanish Case," CEP Discussion Papers dp0438, Centre for Economic Performance, LSE.
  5. Fougere, Denis & Kramarz, Francis & Magnac, Thierry, 2000. "Youth employment policies in France," European Economic Review, Elsevier, vol. 44(4-6), pages 928-942, May.
  6. Cahuc, Pierre & Postel-Vinay, Fabien, 2001. "Temporary Jobs, Employment Protection and Labor Market Performance," IZA Discussion Papers 260, Institute for the Study of Labor (IZA).
  7. P Adam & P Canziani, 1998. "Partial De-Regulation: Fixed-Term Contracts in Italy and Spain," CEP Discussion Papers dp0386, Centre for Economic Performance, LSE.
  8. Olivier Blanchard & Pedro Portugal, 1998. "What Hides Behind an Umemployment Rate: Comparing Portuguese and U.S. Unemployment," NBER Working Papers 6636, National Bureau of Economic Research, Inc.
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  1. ¿Por qué han divergido tanto las tasas de paro en España y Francia en la Gran Recesión?
    by Samuel Bentolila in Nada Es Gratis on 2011-02-01 07:30:04
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