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The Shortcomings of a Partial Release of Employment Protection Laws

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  • Pierre Cahuc
  • Stéphane Carcillo

Abstract

This paper proposes an ex ante evaluation of the effects of new labor contracts such as the "Contrat Nouvelle Embauche" (CNE) introduced in France in 2005. The lessons we draw are of sufficiently general interest to be applicable to other countries or reforms of employment protection laws. Using a model that captures the characteristics of the French labor market, we simulate the effects of this reform on unemployment, employment, and welfare. We estimate that the CNE will lead to the creation of 70,000 additional jobs in the long run, but at the cost of a slight deterioration in welfare.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 06/301.

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Length: 40
Date of creation: 01 Dec 2006
Date of revision:
Handle: RePEc:imf:imfwpa:06/301

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Keywords: Labor markets; Social safety nets; Unemployment; Economic models; jobs; employment; job creation; labor market; labor force; unemployment rate; unemployed; job destruction; labor force participation; labor contracts; unemployed individuals; labor participation; employment rate; labor force participation rate; employment protection; labor participation rate; labor contract; job search; unemployed individual; duration of unemployment; unemployment spells; labor survey; labour; creating jobs; total employment; temporary work; average duration of employment; labor flows; unemployed job seekers; new jobs; unemployment rates; effect on employment; employment protection legislation; job search process; labor supply; job seekers; labor union; labor law; employment contract; labor laws; wage employment; unemployment insurance; temporary jobs; unemployed workers; average duration of unemployment; labor demand; subsidized employment; labor market reform; minimum wage employment; job opportunities; short-term employment; beveridge curve; effects on employment; less job security; labor market tightness; labor market conditions; labor turnover; rate of unemployment; long-term unemployment; employment policy; labor market rigidity; overall employment; job prospects; job turnover; labor market performance; job insecurity; search unemployment; job offers; agricultural jobs; net job creation; national unemployment; equilibrium unemployment; unemployment spell; employment increases; job stability; unemployment compensation; job security; labor force participants; labor market participation; low-wage employment; dismissed worker; labour demand; growth of employment; unemployment benefit; job offer;

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References

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  1. Dominique Goux & Eric Maurin & Marianne Pauchet, 1999. "Fixed-term Contracts and the Dynamics of Labour Demand," Working Papers 99-02, Centre de Recherche en Economie et Statistique.
  2. Cahuc, Pierre & Malherbet, Franck, 2004. "Unemployment compensation finance and labor market rigidity," Journal of Public Economics, Elsevier, vol. 88(3-4), pages 481-501, March.
  3. Kramarz, Francis & Michaud, Marie-Laure, 2003. "The Shape of Hiring and Separation Costs," CEPR Discussion Papers 3685, C.E.P.R. Discussion Papers.
  4. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, vol. 9(1), pages 63-91, February.
  5. Kramarz, Francis & Philippon, Thomas, 2000. "The Impact of Differential Payroll Tax Subsidies on Minimum Wage Employment," IZA Discussion Papers 219, Institute for the Study of Labor (IZA).
  6. 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.
  7. Bernard Salanié & Guy Laroque, 2000. "Une décomposition du non-emploi en France," Économie et Statistique, Programme National Persée, vol. 331(1), pages 47-66.
  8. Jian-Ping Zhou, 2006. "Reforming Employment Protection Legislation in France," IMF Working Papers 06/108, International Monetary Fund.
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Citations

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Cited by:
  1. Samuel Bentolila & Pierre Cahuc & Juan J. Dolado & Thomas Le Barbanchon, 2010. "Two-Tier Labor Markets In The Great Recession: France Vs. Spain," Working Papers wp2010_1009, CEMFI.
  2. Decreuse, Bruno & van Ypersele, Tanguy, 2010. "Housing market regulation and the social demand for job protection," CEPR Discussion Papers 7845, C.E.P.R. Discussion Papers.
  3. Samuel Bentolila & Pierre Cahuc & Juan José Dolado & Thomas Le Barbanchon, ., 2010. "Unemployment and Temporary Jobs in the Crisis: Comparing France and Spain," Working Papers 2010-07, FEDEA.

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