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Excess Worker Turnover and Fixed-Term Contracts: Causal Evidence in a Two-Tier System

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  • Centeno, Mario

    ()
    (Banco de Portugal)

  • Novo, Alvaro A.

    ()
    (Banco de Portugal)

Abstract

Portuguese firms engage in intense reallocation, most employers simultaneously hire and separate from workers, resulting in high excess worker turnover flows. These flows are constrained by the employment protection gap between open-ended and fixed-term contracts. We explore a reform that increased the employment protection of open-ended contracts and generated a quasi-experiment. The causal evidence points to an increase in the share and in the excess turnover of fixed-term contracts in treated firms. The excess turnover of open-ended contracts remained unchanged. This result is consistent with a high degree of substitution between open-ended and fixed-term contracts. At the firm level, we also show that excess turnover is quite heterogeneous and quantify its association with firm, match, and worker characteristics.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6239.

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Length: 32 pages
Date of creation: Dec 2011
Date of revision:
Publication status: published in: Labour Economics, 2012, 19 (3), 320-328
Handle: RePEc:iza:izadps:dp6239

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Keywords: excess worker turnover; two-tier systems; quasi-experiment; fixed-term contracts;

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Citations

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Cited by:
  1. Daniel Dias & Carlos Robalo Marques & Fernando Martins, 2012. "Wage rigidity and employment adjustment at the firm level: evidence from survey data," Working Papers, Banco de Portugal, Economics and Research Department w201212, Banco de Portugal, Economics and Research Department.
  2. Le Barbanchon, Thomas & Malherbet, Franck, 2013. "An anatomy of the French labour market : country case studies on labour market segmentation," ILO Working Papers, International Labour Organization 481497, International Labour Organization.
  3. Mário Centeno & Álvaro A. Novo, 2012. "Excess worker turnover and fixed-term contracts: Causal evidence in a two-tier system," Working Papers, Banco de Portugal, Economics and Research Department w201205, Banco de Portugal, Economics and Research Department.
  4. Mário Centeno & Álvaro A. Novo, 2012. "Segmentation," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department, Banco de Portugal, Economics and Research Department.
  5. Cahuc, Pierre & Charlot, Olivier & Malherbet, Franck, 2012. "Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover," CEPR Discussion Papers, C.E.P.R. Discussion Papers 8864, C.E.P.R. Discussion Papers.
  6. Charlot, Olivier & Malherbet, Franck, 2013. "Education and employment protection," Labour Economics, Elsevier, Elsevier, vol. 20(C), pages 3-23.
  7. Daniel Dias & Carlos Robalo Marques & Fernando Martins, 2012. "Labour cost-cutting strategies microeconomic evidence from survey data," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department, Banco de Portugal, Economics and Research Department.

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