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Employment Protection Reforms, Employment and the Incidence of Temporary Jobs in Europe: 1995-2001

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Author Info
Lawrence M. Kahn () (Cornell University, CESifo and IZA)

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Abstract

Using European Community Household Panel data for nine countries for 1996-2001, I investigate the impact of reforms of employment protection systems on employment and on temporary jobs for wage and salary workers. Individual fixed effects models are estimated, with the inclusion of country-specific trends in the dependent variable, addressing the possibly changing labor force composition and the possible endogeneity of the reforms. A basic finding that is robust to all specifications and to the disaggregation of the sample by country is that policies making it easier to create temporary jobs raise the likelihood that wage and salary workers will be in temporary jobs. However, there is no evidence that such reforms raise employment, and in some countries, they appear to lower employment. Thus, these reforms appear rather to encourage a substitution of temporary for permanent work. Reforms of permanent employment protection mandates have small and insignificant effects on employment and temporary jobs on average. Moreover, when I disaggregate by country, such reforms appear more often to lower overall employment and to lower the share of employment in permanent jobs. These are likely to reflect short run impacts of such reforms, which make it easier for firms to discharge substandard workers.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 3241.

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Length: 47 pages
Date of creation: Dec 2007
Date of revision:
Handle: RePEc:iza:izadps:dp3241

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Related research
Keywords: employment protection; temporary jobs;

Find related papers by JEL classification:
J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
J23 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Demand

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References listed on IDEAS
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.:
  1. Adriana D. Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," Economics Working Papers 388, Department of Economics and Business, Universitat Pompeu Fabra. [Downloadable!]
  2. Alison L. Booth & Marco Francesconi & Jeff Frank, 2002. "Temporary Jobs: Stepping Stones Or Dead Ends?," Economic Journal, Royal Economic Society, vol. 112(480), pages F189-F213, June. [Downloadable!] (restricted)
    Other versions:
  3. Holmlund, Bertil & Storrie, Donald, 2002. "Temporary Work in Turbulent Times: The Swedish Experience," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
  4. Lawrence M. Kahn, 2007. "The Impact of Employment Protection Mandates on Demographic Temporary Employment Patterns: International Microeconomic Evidence," Economic Journal, Royal Economic Society, vol. 117(521), pages 333-356, 06. [Downloadable!] (restricted)
    Other versions:
  5. Bertola, Giuseppe, 1999. "Microeconomic perspectives on aggregate labor markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 45, pages 2985-3028 Elsevier. [Downloadable!] (restricted)
  6. David Autor & Susan Houseman, 2005. "Do Temporary Help Jobs Improve Labor Market Outcomes
    for Low-Skilled Workers? Evidence from Random Assignments    ," Staff Working Papers 05-124, W.E. Upjohn Institute for Employment Research. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
  8. Kugler, Adriana & Jimeno, Juan F. & Hernanz, Virginia, 2002. "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labor Market Reforms," IZA Discussion Papers 657, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Kugler, Adriana D. & Pica, Giovanni, 2005. "Effects of Employment Protection on Worker and Job Flows: Evidence from the 1990 Italian Reform," CEPR Discussion Papers 5256, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  10. Adriana Kugler, 1999. "The Impact of Firing Costs on Turnover and Unemployment: Evidence from the Colombian Labour Market Reform," International Tax and Public Finance, Springer, vol. 6(3), pages 389-410, August. [Downloadable!] (restricted)
  11. Björn Brügemann, 2007. "Employment protection: Tough to scrap or tough to get?," Economic Journal, Royal Economic Society, vol. 117(521), pages 386-415, 06. [Downloadable!] (restricted)
    Other versions:
  12. Tito Boeri & Pietro Garibaldi, 2007. "Two Tier Reforms of Employment Protection: a Honeymoon Effect?," Economic Journal, Royal Economic Society, vol. 117(521), pages 357-385, 06. [Downloadable!] (restricted)
    Other versions:
  13. Giuseppe Bertola & Francine Blau & Lawrence Kahn, 2007. "Labor market institutions and demographic employment patterns," Journal of Population Economics, Springer, vol. 20(4), pages 833-867, October. [Downloadable!] (restricted)
    Other versions:
  14. Ioana Marinescu, 2007. "Shortening the Tenure Clock: the Impact of Strengthened U.K. Job Security Legislation," Working Papers 07-04, Utrecht School of Economics. [Downloadable!]
  15. Gilles Saint-Paul, 2002. "The Political Economy of Employment Protection," Journal of Political Economy, University of Chicago Press, vol. 110(3), pages 672-701, June. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, 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.)

  1. Cervini, María & Ramos, Xavi, 2008. "Long Term Earnings Inequality, Earnings Instability and Temporary Employment in Spain: 1993–2000," IZA Discussion Papers 3538, Institute for the Study of Labor (IZA). [Downloadable!]
  2. Kahn, Lawrence M., 2009. "Temporary Jobs and Job Search Effort in Europe," IZA Discussion Papers 4020, Institute for the Study of Labor (IZA). [Downloadable!]
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