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The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers

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  • Munoz, Pablo
  • Micco, Alejandro

Abstract

We study the impact of a reform that increased the regulatory burden on temporary agency work (TAW) in Chile. Using a panel of manufacturing plants, we show that the use of TAW fell immediately after the regulation, with differential effects by plants’ size and volatility. Difference-in-differences estimates suggest that plants using TAW substituted away from agency workers after the regulation, increasing regular work by 9.2%. Despite this substitution effect, total employment decreased by 8.6% in these plants. We report less precise evidence of negative scale effects on output and profits.

Suggested Citation

  • Munoz, Pablo & Micco, Alejandro, 2019. "The Impact of Extended Employment Protection Laws on the Demand for Temporary Agency Workers," Institute for Research on Labor and Employment, Working Paper Series qt60t4b2jp, Institute of Industrial Relations, UC Berkeley.
    • Handle: RePEc:cdl:indrel:qt60t4b2jp
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    Law; Social and Behavioral Sciences; Global Labor; Labor Markets; Public Policy;
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