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The perverse effects of partial employment protection reform : experience rating and french old workers

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Author Info

  • Luc Behaghel
  • Bruno Crépon
  • Béatrice Sédillot

    ()

Abstract

French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. This is a rare case of experience rating in the European context. We evaluate its impact on layoffs as well as on hiring, taking advantage of several changes in the measure since its introduction in 1987. A legislative change in 1992 exempted firms from the tax for workers who were hired after age 50. Following this change, the transition rate from unemployment to employment increased significantly for workers over 50 compared to workers less than 50. The difference is sizeable: between one third and one half of the initial transition rate. Evidence on the effect on layoffs is less clear cut. The impact is sizeable only for the most stringent tax schedule, after 1998.

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Bibliographic Info

Paper provided by Laboratoire d'Economie Appliquee, INRA in its series Research Unit Working Papers with number 0608.

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Length: 18 pages
Date of creation: Sep 2006
Date of revision:
Handle: RePEc:lea:leawpi:0608

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Web page: http://www.inra.fr/Internet/Departements/ESR/UR/lea/index.html

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Keywords: Experience rating; employment protection; old workers; layoff; hiring;

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References

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  1. John M. Abowd & Francis Kramarz, 1997. "The Costs of Hiring and Separations," NBER Working Papers 6110, National Bureau of Economic Research, Inc.
  2. Daron Acemoglu & Joshua Angrist, 1998. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Working papers 98-13, Massachusetts Institute of Technology (MIT), Department of Economics.
  3. Patrick Aubert, 2003. "Les quinquagénaires dans l'emploi salarié privé," Économie et Statistique, Programme National Persée, vol. 368(1), pages 65-94.
  4. Topel, Robert H, 1984. "Experience Rating of Unemployment Insurance and the Incidence of Unemployment," Journal of Law and Economics, University of Chicago Press, vol. 27(1), pages 61-90, April.
  5. Topel, Robert H, 1983. "On Layoffs and Unemployment Insurance," American Economic Review, American Economic Association, vol. 73(4), pages 541-59, September.
  6. David H. Autor & John J. Donohue III & Stewart J. Schwab, 2003. "The Costs of Wrongful-Discharge Laws," NBER Working Papers 9425, National Bureau of Economic Research, Inc.
  7. 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.
  8. Hakola, Tuulia & Uusitalo, Roope, 2005. "Not so voluntary retirement decisions? Evidence from a pension reform," Journal of Public Economics, Elsevier, vol. 89(11-12), pages 2121-2136, December.
  9. Anderson, Patricia M. & Meyer, Bruce D., 2000. "The effects of the unemployment insurance payroll tax on wages, employment, claims and denials," Journal of Public Economics, Elsevier, vol. 78(1-2), pages 81-106, October.
  10. Anderson, Patricia M & Meyer, Bruce D, 1997. "Unemployment Insurance Takeup Rates and the After-Tax Value of Benefits," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 913-37, August.
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Cited by:
  1. Åsa Rosén & Steinar Holden, 2009. "Discrimination and Employment Protection," 2009 Meeting Papers 350, Society for Economic Dynamics.
  2. Daniel Hallberg & Matias Eklöf, 2010. "Do buy-outs of older workers matter?: Estimating retirement behavior with special early retirement offers," International Journal of Manpower, Emerald Group Publishing, vol. 31(3), pages 337-359, July.
  3. Jean-Olivier Hairault & Francois Langot & Arnaud Cheron, 2007. "Job creation and job destruction over the life cycle," 2007 Meeting Papers 431, Society for Economic Dynamics.
  4. Hallberg, Daniel, 2008. "Economic fluctuations and retirement of older employees," Working Paper Series 2008:2, IFAU - Institute for Evaluation of Labour Market and Education Policy.
  5. Bassanini, Andrea & Nunziata, Luca & Venn, Danielle, 2008. "Job Protection Legislation and Productivity Growth in OECD Countries," IZA Discussion Papers 3555, Institute for the Study of Labor (IZA).
  6. Hairault, Jean-Olivier & Chéron, Arnaud & Langot, François, 2007. "Job Creation and Job Destruction over the Life Cycle: The Older Workers in the Spotlight," IZA Discussion Papers 2597, Institute for the Study of Labor (IZA).

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