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The shape of hiring and separation costs in France

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  • Kramarz, Francis
  • Michaud, Marie-Laure

Abstract

In this article, we estimate the structure of costs of hiring, terminating, and retiring employees in France. We use a representative panel data set of French establishments that contains direct measures of these various costs as well as measures of entries and exits for the years 1992 and 1996. First, we show that our panel data source is able to reproduce results obtained by Abowd and Kramarz (2003) when we use the cross-section dimension. Our estimates show that collective terminations are much more expensive than individual terminations: legislation, namely the requirement to set up a "social plan" in case of collective terminations, magnifies firing costs. Collective terminations entail very large fixed costs. Termination costs are essentially linear in the number of terminated workers, with collective terminations being much more expensive. The costs of retirement are concave in the number of retired workers with a fixed cost component which is smaller than the one estimated for terminations, and quite smaller than that obtained by Abowd and Kramarz (2003). Finally, we find that hiring costs are small and seem only present when hiring on CDI; costs of hiring on short-term contracts are almost zero. Finally, the fixed (firm-specific) component of hiring costs is very small.

Suggested Citation

  • Kramarz, Francis & Michaud, Marie-Laure, 2010. "The shape of hiring and separation costs in France," Labour Economics, Elsevier, vol. 17(1), pages 27-37, January.
  • Handle: RePEc:eee:labeco:v:17:y:2010:i:1:p:27-37
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    References listed on IDEAS

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    Cited by:

    1. Samuel Muehlemann & Harald Pfeifer, 2016. "The Structure of Hiring Costs in Germany: Evidence from Firm-Level Data," Industrial Relations: A Journal of Economy and Society, Wiley Blackwell, vol. 55(2), pages 193-218, April.
    2. Spyros Arvanitis, 2008. "Are Firm Innovativeness and Firm Age Relevant for the Supply of Vocational Training? - A Study Based on Swiss Micro Data," KOF Working papers 08-198, KOF Swiss Economic Institute, ETH Zurich.
    3. Samuel Mühlemann & Mirjam Strupler Leiser, 2015. "Ten Facts You Need To Know About Hiring," Economics of Education Working Paper Series 0111, University of Zurich, Department of Business Administration (IBW), revised Sep 2015.
    4. Edo Anthony, 2015. "The Impact of Immigration on Native Wages and Employment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, pages 1151-1196.
    5. Emmanuel Dhyne & Catherine Fuss & Claude Mathieu, 2010. "Labour demand adjustment : Does foreign ownership matter ?," Working Paper Research 207, National Bank of Belgium.
    6. Giacinta Cestone & Chiara Fumagalli & Francis Kramaz & Giovanni Pica, 2015. "Insurance Between Firms: The Role of Internal Labor Markets," CSEF Working Papers 386, Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy, revised 15 Feb 2017.
    7. Samuel Muehlemann & Harald Pfeifer & Felix Wenzelmann, 2013. "The Costs of Recruiting Apprentices: Evidence from German Firm-Level Data," Economics of Education Working Paper Series 0095, University of Zurich, Department of Business Administration (IBW), revised Nov 2015.
    8. Dube, Arindrajit & Freeman, Eric & Reich, Michael, 2010. "Employee Replacement Costs," Institute for Research on Labor and Employment, Working Paper Series qt7kc29981, Institute of Industrial Relations, UC Berkeley.
    9. Emmanuel Dhyne & Catherine Fuss & Claude Mathieu, 2015. "Labour Demand Adjustment: Does Foreign Ownership Matter?," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 77(6), pages 854-871, December.
    10. Addison, John T. & Portugal, Pedro & Varejão, José, 2014. "Labor demand research: Toward a better match between better theory and better data," Labour Economics, Elsevier, pages 4-11.
    11. repec:ilo:ilowps:481497 is not listed on IDEAS
    12. Jung, Sven, 2013. "Employment Adjustment in German Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79696, Verein für Socialpolitik / German Economic Association.
    13. Bassanini, Andrea & Garnero, Andrea, 2013. "Dismissal protection and worker flows in OECD countries: Evidence from cross-country/cross-industry data," Labour Economics, Elsevier, pages 25-41.
    14. Giacinta Cestone & Chiara Fumagalli & Francis Kramarz & Giovanni Pica, 2017. "Insurance Between Firms: The Role of Internal Labor Markets," Working Papers 2017-89, Center for Research in Economics and Statistics.
    15. Luis Garicano & Claire Lelarge & John Van Reenen, 2016. "Firm Size Distortions and the Productivity Distribution: Evidence from France," American Economic Review, American Economic Association, pages 3439-3479.
    16. Blatter, Marc & Muehlemann, Samuel & Schenker, Samuel, 2012. "The costs of hiring skilled workers," European Economic Review, Elsevier, vol. 56(1), pages 20-35.
    17. Marc Blatter & Samuel Muehlemann & Samuel Schenker & Stefan C. Wolter, 2016. "Hiring costs for skilled workers and the supply of firm-provided training," Oxford Economic Papers, Oxford University Press, vol. 68(1), pages 238-257.
    18. Henri Fraisse & Francis Kramarz & Corinne Prost, 2015. "Labor Disputes and Job Flows," ILR Review, Cornell University, ILR School, vol. 68(5), pages 1043-1077, October.
    19. Jahn, Elke & Hirsch, Boris, 2012. "Is there monopsonistic discrimination against immigrants? First evidence from linked employer employee data," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 65417, Verein für Socialpolitik / German Economic Association.
    20. Charlot, Olivier & Malherbet, Franck, 2013. "Education and employment protection," Labour Economics, Elsevier, pages 3-23.
    21. Anthony Edo, 2016. "How do rigid labor markets absorb immigration? Evidence from France," IZA Journal of Migration, Springer;Forschungsinstitut zur Zukunft der Arbeit GmbH (IZA), pages 1-20.
    22. Le Barbanchon, Thomas. & Malherbet, Franck., 2013. "An anatomy of the French labour market : country case studies on labour market segmentation," ILO Working Papers 994814973402676, International Labour Organization.
    23. Cahuc, Pierre & Carcillo, Stéphane & Le Barbanchon, Thomas, 2017. "The Effectiveness of Hiring Credits," IZA Discussion Papers 11248, Institute for the Study of Labor (IZA).

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