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Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover

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Author Info

  • Cahuc, Pierre

    ()
    (Ecole Polytechnique, Paris)

  • Charlot, Olivier

    ()
    (University of Cergy-Pontoise)

  • Malherbet, Franck

    ()
    (University of Rouen)

Abstract

This paper provides a simple model which explains the choice between permanent and temporary jobs. This model, which incorporates important features of actual employment protection legislations neglected by the economic literature so far, reproduces the main stylized facts about entries into permanent and temporary jobs observed in Continental European countries. We show that the stringency of legal constraints on the termination of permanent jobs has a strong positive impact on the turnover of temporary jobs. We also find that job protection has very small effects on total employment but induces large substitution of temporary jobs for permanent jobs which significantly reduces aggregate production.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6365.

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Length: 55 pages
Date of creation: Feb 2012
Date of revision:
Handle: RePEc:iza:izadps:dp6365

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Keywords: temporary jobs; employment protection legislation;

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References

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  1. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, American Economic Association, vol. 95(1), pages 25-49, March.
  2. James Costain & Juan F. Jimeno & Carlos Thomas, 2010. "Employment fluctuations in a dual labor market," Banco de Espa�a Working Papers 1013, Banco de Espa�a.
  3. Bentolila, Samuel & Cahuc, Pierre & Dolado, Juan J. & Le Barbanchon, Thomas, 2010. "Two-Tier Labor Markets in the Great Recession: France vs. Spain," IZA Discussion Papers 5340, Institute for the Study of Labor (IZA).
  4. Barbara Petrongolo & Christopher A. Pissarides, 2000. "Looking Into the Black Box: A Survey of the Matching Function," CEP Discussion Papers dp0470, Centre for Economic Performance, LSE.
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  8. César Alonso-Borrego & Jesús Fernández-Villaverde & José E. Galdón-Sánchez, 2005. "Evaluating Labor Market Reforms: A General Equilibrium Approach," NBER Working Papers 11519, National Bureau of Economic Research, Inc.
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  10. Samuel Bentolila & Juan Jose Dolado & Juan F. Jimeno, 2008. "Two-tier Employment Protection Reforms: The Spanish Experience," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, Ifo Institute for Economic Research at the University of Munich, vol. 6(4), pages 49-56, December.
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  16. Portugal, Pedro & Varejão, José, 2009. "Why Do Firms Use Fixed-Term Contracts?," IZA Discussion Papers 4380, Institute for the Study of Labor (IZA).
  17. Saint-Paul, Gilles, 1999. "The Political Economy of Employment Protection," CEPR Discussion Papers, C.E.P.R. Discussion Papers 2109, C.E.P.R. Discussion Papers.
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  20. Lorenzo Cappellari & Carlo Dell’Aringa & Marco Leonardi, 2012. "Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 122(562), pages F188-F215, 08.
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Citations

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Cited by:
  1. 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.
  2. Addison, John T. & Portugal, Pedro & Varejão, José, 2014. "Labour Demand Research: Towards a Better Match between Better Theory and Better Data," IZA Discussion Papers 8125, Institute for the Study of Labor (IZA).
  3. Charlot, Olivier & Malherbet, Franck, 2013. "Education and employment protection," Labour Economics, Elsevier, Elsevier, vol. 20(C), pages 3-23.
  4. Cappellari, Lorenzo & Dell'Aringa, Carlo & Leonardi, Marco, 2012. "Temporary Employment, Job Flows and Productivity: A Tale of Two Reforms," IZA Discussion Papers 6526, Institute for the Study of Labor (IZA).
  5. 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.
  6. 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.

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