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Reforming Employment Protection Legislation in France

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  • Jian-Ping Zhou
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    Abstract

    Over the last 15 years, the reforms of employment protection legislation (EPL) in European countries have mainly eased hiring and firing restrictions for temporary employment while leaving the strict EPL provisions for regular or permanent contracts unchanged. Recent reforms in France follow this pattern. Using a search-matching model, we argue that this type of partial reform is inefficient: easing restrictions on temporary jobs fosters both job creation and job destruction, but strict EPL discourages both. The overall impact on equilibrium unemployment is thus ambiguous, depending on the characteristics of the specific labor market. Simulations of the model, calibrated for the French labor market, suggest that the job destruction effect is stronger, thus raising the unemployment rate.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/108.

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    Length: 29
    Date of creation: 01 Apr 2006
    Date of revision:
    Handle: RePEc:imf:imfwpa:06/108

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    Related research

    Keywords: Unemployment; Labor markets; Economic models; job creation; labor market; jobs; unemployed; unemployment duration; equilibrium unemployment; job search; unemployment benefits; temporary employment; employment contract; bargaining power; labor market flexibility; labor market institutions; collective dismissal; labor market performance; job match; high unemployment; unemployment insurance; total unemployment; new jobs; job vacancies; job market; new job; labor demand; unemployment benefit; labor market programs; labor productivity; inflows into unemployment; labor market variables; unemployment experience; employment; unemployment rate; employment protection; job destruction; labor market tightness; employment protection legislation; job vacancy; unemployed workers; unemployed worker; structural unemployment; temporary jobs; labor force; labour; job flows; overall employment; labour market; labor contracts; employment outlook; skilled workers; labor market rigidities; job searching; job protection; active labor market; labor organization; labor economics; training programs; employment programs; employment duration; high employment; labour markets; labor supply; employment services; permanent job; unemployment ratio; labour market institutions; equilibrium unemployment rate; job protection policies; unemployment compensation; labor market reform; labor adjustment; unemployment spells; job destruction rate; labor market policies; labor market reforms; regular jobs; labor market conditions; labor contract; employment subsidies; net job creation; employment legislation; job searches; labor adjustment costs; job turnover; active labor; unemployment insurance benefits; access to jobs; collective dismissals; active labor market programs; labor market segmentation; temporary workers;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Saint-Paul, Gilles, 2004. "Why are European Countries Diverging in their Unemployment Experience?," CEPR Discussion Papers 4328, C.E.P.R. Discussion Papers.
    2. Dolado, Juan J. & Jansen, Marcel & Jimeno, Juan F., 2005. "Dual Employment Protection Legislation: A Framework for Analysis," IZA Discussion Papers 1564, Institute for the Study of Labor (IZA).
    3. Richard Rogerson & Robert Shimer & Randall Wright, 2004. "Search-Theoretic Models of the Labor Market-A Survey," NBER Working Papers 10655, National Bureau of Economic Research, Inc.
    4. Thomas Bauer & Stefan Bender & Holger Bonin, 2004. "Dismissal Protection and Worker Flows in Small Establishments," RWI Discussion Papers 0014, Rheinisch-Westfälisches Institut für Wirtschaftsforschung.
    5. Kramarz, Francis & Michaud, Marie-Laure, 2004. "The Shape of Hiring and Separation Costs," IZA Discussion Papers 1170, Institute for the Study of Labor (IZA).
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    7. Layard, Richard & Nickell, Stephen & Jackman, Richard, 2005. "Unemployment: Macroeconomic Performance and the Labour Market," OUP Catalogue, Oxford University Press, number 9780199279173.
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    10. Lalive, Rafael & Zweimüller, Josef, 2002. "Benefit Entitlement and Unemployment Duration: The Role of Policy Endogeneity," IZA Discussion Papers 492, Institute for the Study of Labor (IZA).
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    13. repec:fth:inseep:9938 is not listed on IDEAS
    14. 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).
    15. Juan J Dolado & Carlos Garcia--Serrano & Juan F. Jimeno, 2002. "Drawing Lessons From The Boom Of Temporary Jobs In Spain," Economic Journal, Royal Economic Society, vol. 112(721), pages F270-F295, June.
    16. Béatrice Sédillot & Bruno Crépon & Luc Behaghel, 2004. "Contribution Delalande et transitions sur le marché du travail," Économie et Statistique, Programme National Persée, vol. 372(1), pages 61-88.
    17. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
    18. Guy Laroque & Bernard Salanie, 2002. "Labour market institutions and employment in France," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 17(1), pages 25-48.
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    20. Olivier Blanchard & Augustin Landier, 2001. "The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France," NBER Working Papers 8219, National Bureau of Economic Research, Inc.
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    Citations

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    Cited by:
    1. Jian-Ping Zhou, 2007. "Danish for All? Balancing Flexibility with Security," IMF Working Papers 07/36, International Monetary Fund.
    2. Catherine Robinson & Mary O'Mahony & Michela Vecchi, 2004. "The Impact Of ICT On The Demand For Skilled Labour: A Cross-Country Comparison," Royal Economic Society Annual Conference 2004 91, Royal Economic Society.
    3. Pierre Cahuc & Stéphane Carcillo, 2006. "The Shortcomings of a Partial Release of Employment Protection Laws," IMF Working Papers 06/301, International Monetary Fund.
    4. Kazanas, Thanassis & Miaouli, Natasha, 2014. "Wage-setting and capital in unionized markets: Evidence from South Europe," Economic Modelling, Elsevier, vol. 37(C), pages 368-376.

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