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The determinants for labour contract length A French micro-econometric study

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  • Mohamed Ali Ben Halima

    ()
    (GATE CNRS)

Abstract

Two types of analyses intend to explain the determinants of labour contracts length. A first analysis emphasizes on the contracting costs and the level of uncertainty. The second analysis focuses on the incentive and selection effect of the contract length. This paper test the determinants for contract duration by means of econometric duration models. The estimates are carried out from French data called ‘Trajectoires des Demandeurs d'Emploi’ (TDE), conducted by the Research Direction of Employment Ministry (DARES). An econometric treatment of the endogeneity of the labour contract status (indefinite-term contract (ITC fixed-term contract (FTC), temporary contract (TC)) and unobservable heterogeneity is carried out. Our results show that wages positively affect employment duration. This confirms the positive effect of contracting costs reported. Moreover, staying in a firm more than two years increases the length of the next contract.

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Paper provided by Groupe d'Analyse et de Théorie Economique (GATE), Centre national de la recherche scientifique (CNRS), Université Lyon 2, Ecole Normale Supérieure in its series Working Papers with number 0503.

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Length: 26 pages
Date of creation: Nov 2005
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Handle: RePEc:gat:wpaper:0503

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Keywords: Contract lenght; Duration model; Selectivity bias; Unobservable heterogeneity;

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  1. Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
  2. Christofides, L.N., 1989. "The Interaction Between Indexation, Contract Duration And Non-Contengent Wage Adjustment," Working Papers 1989-13, University of Guelph, Department of Economics and Finance.
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  15. Alison L Booth & Juan J. Dolado & Jeff Frank, 2002. "Symposium On Temporary Work Introduction," Economic Journal, Royal Economic Society, vol. 112(480), pages F181-F188, June.
  16. Eric Maurin, 2000. "The European Paradox : Do Flexible Contracts Create Rigid Labor Markets ?," Working Papers 2000-07, Centre de Recherche en Economie et Statistique.
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  18. Hagen, Tobias, 2003. "Do Fixed-Term Contracts Increase the Long-Term Employment Opportunities of the Unemployed?," ZEW Discussion Papers 03-49, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  19. Vroman, Susan B, 1989. "Inflation Uncertainty and Contract Duration," The Review of Economics and Statistics, MIT Press, vol. 71(4), pages 677-81, November.
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