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On Short-Term Contracts Regulations

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Abstract

We present a theoretical as well as empirical analysis of the impact of employment regulations on permanent and temporary employment. We consider three different forms of such regulations, namely insider protection, fixed term contract regulations, and legislation on temporary work agencies, and we present some empirical evidence as regards total, female and young employees based on a panel of nine European countries. We show that these three types of regulations have different impacts on the employment performances of those countries. Moreover, these institutions act asymmetrically along the business cycle. The most notable findings are that lower employment protection leads to the substitution of permanent employees by termporary ones with an insignificant net effect on the total; more flexible regulations on fixed term contracts have a beneficial effect on temporary as well as permanent employment among young people; flexible regulations on temporary work agencies have a positive impact on temporary employment, while they may reduce permanent employment.

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File URL: http://www.nuff.ox.ac.uk/Economics/papers/2001/w7/onshorttermcontracts.pdf
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Bibliographic Info

Paper provided by Economics Group, Nuffield College, University of Oxford in its series Economics Papers with number 2001-W7.

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Length: 36pages
Date of creation: 28 Jun 2001
Date of revision:
Handle: RePEc:nuf:econwp:0107

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Web page: http://www.nuff.ox.ac.uk/economics/

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Keywords: Fixed Term Contracts; Temporary Work Agencies; Temporary Employment; Labour Market Institutions; Employment Protection;

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References

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  1. Maia Güell & Barbara Petrongolo, 2000. "Workers Transitions from Temporary to Permanent Employment: the Spanish Case," CEP Discussion Papers dp0438, Centre for Economic Performance, LSE.
  2. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
  3. Bertola, Giuseppe & Ichino, Andrea, 1995. "Wage Inequality and Unemployment: US vs Europe," CEPR Discussion Papers 1186, C.E.P.R. Discussion Papers.
  4. Cahuc, Pierre & Postel-Vinay, Fabien, 2001. "Temporary Jobs, Employment Protection and Labor Market Performance," IZA Discussion Papers 260, Institute for the Study of Labor (IZA).
  5. Olivier Blanchard & Justin Wolfers, 1999. "The Role of Shocks and Institutions in the Rise of European Unemployment: The Aggregate Evidence," NBER Working Papers 7282, National Bureau of Economic Research, Inc.
  6. Belot, Michèle & van Ours, Jan C., 2000. "Does the Recent Success of Some OECD Countries in Lowering their Unemployment Rates Lie in the Clever Design of their Labour Market Reform?," IZA Discussion Papers 147, Institute for the Study of Labor (IZA).
  7. Saint-Paul, Gilles, 1999. "Assessing the Political Viability of Labour Market Reform: The Case of Employment Protection," CEPR Discussion Papers 2136, C.E.P.R. Discussion Papers.
  8. Marcelo Veracierto, 2000. "What are the short-run effects of increasing labor market flexibility?," Working Paper Series WP-00-29, Federal Reserve Bank of Chicago.
  9. Pesaran, M.H. & Smith, R., 1992. "Estimating Long-Run Relationships From Dynamic Heterogeneous Panels," Cambridge Working Papers in Economics 9215, Faculty of Economics, University of Cambridge.
  10. Olivier Blanchard & Augustin Landier, 2001. "The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France," NBER Working Papers 8219, National Bureau of Economic Research, Inc.
  11. Bentolila, Samuel & Saint-Paul, Gilles, 1992. "The macroeconomic impact of flexible labor contracts, with an application to Spain," European Economic Review, Elsevier, vol. 36(5), pages 1013-1047, June.
  12. Maddala, G S & Wu, Shaowen, 1999. " A Comparative Study of Unit Root Tests with Panel Data and a New Simple Test," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 61(0), pages 631-52, Special I.
  13. repec:ese:iserwp:2000-13 is not listed on IDEAS
  14. Stephen Nickell & Luca Nunziata, 2000. "Employment patterns in OECD countries," LSE Research Online Documents on Economics 20198, London School of Economics and Political Science, LSE Library.
  15. Giuseppe Bertola, 1991. "Labor Turnover Costs and Average Labor Demand," NBER Working Papers 3866, National Bureau of Economic Research, Inc.
  16. P Adam & P Canziani, 1998. "Partial De-Regulation: Fixed-Term Contracts in Italy and Spain," CEP Discussion Papers dp0386, Centre for Economic Performance, LSE.
  17. Baltagi, Badi H. & Li, Qi, 1995. "Testing AR(1) against MA(1) disturbances in an error component model," Journal of Econometrics, Elsevier, vol. 68(1), pages 133-151, July.
  18. Bentolila, Samuel & Bertola, Giuseppe, 1990. "Firing Costs and Labour Demand: How Bad Is Eurosclerosis?," Review of Economic Studies, Wiley Blackwell, vol. 57(3), pages 381-402, July.
  19. Nickell, Stephen J, 1981. "Biases in Dynamic Models with Fixed Effects," Econometrica, Econometric Society, vol. 49(6), pages 1417-26, November.
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Citations

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Cited by:
  1. Luca Nunziata, 2002. "Unemployment, Labour Market Institutions and Shocks," Economics Papers 2002-W16, Economics Group, Nuffield College, University of Oxford.
  2. Matteo PICCHIO, 2006. "Wage Differentials between Temporary and Permanent Workers in Italy," Working Papers 257, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  3. Nunziata, Luca, 2003. "Labour market institutions and the cyclical dynamics of employment," Labour Economics, Elsevier, vol. 10(1), pages 31-53, February.
  4. Ugo FRATESI, 2003. "Innovation Diffusion and the Evolution of Regional Disparities," Working Papers 186, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  5. Stefania BUSSOLETTI & Roberto ESPOSTI, 2004. "Regional Convergence, Structural Funds and the Role of Agricolture in the EU. A Panel-Data Approach," Working Papers 220, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  6. Elvio MATTIOLI, 2003. "The measurement of coherence in the evaluation of criteria and its effects or ranking problems illustrated using a multicriteria decision method," Working Papers 199, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  7. Tealdi, Cristina, 2011. "Typical and atypical employment contracts: the case of Italy," MPRA Paper 39456, University Library of Munich, Germany.
  8. Nicola MATTEUCCI & Alessandro STERLACCHINI, 2003. "ICT and Employment Growth in Italian Industries," Working Papers 193, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  9. Roberto ESPOSTI & Pierpaolo PIERANI, 2005. "Price, Private Demand and Optimal Provision of Public R&D in Italian Agriculture," Working Papers 238, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  10. Emanuela Ghignoni, 2006. "Human capital, unemployment, and probability of transition to permanent employment in the Italian regional labour markets," Working Papers 93, University of Rome La Sapienza, Department of Public Economics.
  11. Renato BALDUCCI, 2005. "Public Expenditure and Economic Growth. A critical extension of Barro's (1990) model," Working Papers 240, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
  12. Marcello MESSORI & Alberto ZAZZARO, 2004. "Monetary profits within the circuit: Ponzi finance oer "mors tua, vita mea"?," Working Papers 200, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.

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