IDEAS home Printed from https://ideas.repec.org/p/bca/bocawp/10-27.html
   My bibliography  Save this paper

Stability versus Flexibility: The Role of Temporary Employment in Labour Adjustment

Author

Listed:
  • Shutao Cao
  • Danny Leung

Abstract

In Canada, temporary workers account for 14 per cent of jobs in the non-farm business sector, are present in a range of industries, and account for 40 per cent of the total job reallocation. Yet most models of job reallocation abstract from temporary workers. This paper evaluates the importance of temporary workers in job reallocation in a multi-sector model with costly labour adjustment and temporary workers. The calibrated model captures some features of job reallocation in Canada. The paper shows that the adjustment cost parameters for permanent workers are underestimated if temporary workers are ignored. It also shows that when a shock occurs where permanent workers bear the brunt of reallocation (e.g. the 2005-2008 commodity price boom and the appreciation of the Canadian dollar), aggregate adjustment costs are underestimated if temporary workers are not accounted for.

Suggested Citation

  • Shutao Cao & Danny Leung, 2010. "Stability versus Flexibility: The Role of Temporary Employment in Labour Adjustment," Staff Working Papers 10-27, Bank of Canada.
  • Handle: RePEc:bca:bocawp:10-27
    as

    Download full text from publisher

    File URL: https://www.bankofcanada.ca/wp-content/uploads/2010/11/wp10-27.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alonso-Borrego, César & Fernández-Villaverde, Jesús & Galdon-Sanchez, Jose Enrique, 2004. "Evaluating Labor Market Reforms: A General Equilibrium Approach," IZA Discussion Papers 1129, Institute of Labor Economics (IZA).
    2. José Varejão & Pedro Portugal, 2007. "Employment Dynamics and the Structure of Labor Adjustment Costs," Journal of Labor Economics, University of Chicago Press, vol. 25, pages 137-165.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Shutao Cao & Enchuan Shao & Pedro Silos, 2010. "Fixed-Term and Permanent Employment Contracts: Theory and Evidence," CESifo Working Paper Series 3150, CESifo.
    2. Shutao Cao & Enchuan Shao & Pedro Silos, 2010. "Fixed-term and permanent employment contracts: theory and evidence," FRB Atlanta Working Paper 2010-13, Federal Reserve Bank of Atlanta.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Pedro S. Martins, 2007. "Heterogeneity In Real Wage Cyclicality," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(5), pages 684-698, November.
    2. Lia Pacelli & Silvia Pasqua & Claudia Villosio, 2007. "What Does the Stork Bring to Women’s Working Career?," LABORatorio R. Revelli Working Papers Series 58, LABORatorio R. Revelli, Centre for Employment Studies.
    3. Jordi Galí & Thijs van Rens, 2008. "The vanishing procyclicality of labor productivity," Economics Working Papers 1230, Department of Economics and Business, Universitat Pompeu Fabra, revised Jul 2010.
    4. Alberto Bayo-Moriones & Jose E. Galdon-Sanchez & Maia Güell, 2010. "Is seniority-based pay used as a motivational device? Evidence from plant-level data," Research in Labor Economics, in: Solomon W. Polachek & Konstantinos Tatsiramos (ed.), Jobs, Training, and Worker Well-being, volume 30, pages 155-187, Emerald Publishing Ltd.
    5. Cahuc, Pierre & Charlot, Olivier & Malherbet, Franck, 2012. "Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover," CEPR Discussion Papers 8864, C.E.P.R. Discussion Papers.
    6. Pinoli, Sara, 2008. "Screening ex-ante or screening on-the-job? The impact of the employment contract," MPRA Paper 11429, University Library of Munich, Germany.
    7. Matouschek, Niko & Ramezzana, Paolo & Robert-Nicoud, Frédéric, 2009. "Labor market reforms, job instability, and the flexibility of the employment relationship," European Economic Review, Elsevier, vol. 53(1), pages 19-36, January.
    8. Fang Yao, 2008. "Lumpy Labor Adjustment as a Propagation Mechanism of Business Cycles," SFB 649 Discussion Papers SFB649DP2008-022, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    9. Costas Meghir, 2006. "Dynamic models for policy evaluation," IFS Working Papers W06/08, Institute for Fiscal Studies.
    10. Miyamoto Hiroaki, 2016. "Growth and non-regular employment," The B.E. Journal of Macroeconomics, De Gruyter, vol. 16(2), pages 523-554, June.
    11. Øivind Anti Nilsen & Magne Vange, 2018. "Intermittent Price Changes in Production Plants: Empirical Evidence Using Monthly Data," CESifo Working Paper Series 7145, CESifo.
    12. Shutao Cao & Enchuan Shao & Pedro Silos, 2010. "Fixed-Term and Permanent Employment Contracts: Theory and Evidence," CESifo Working Paper Series 3150, CESifo.
    13. repec:tur:wpaper:6 is not listed on IDEAS
    14. Marta Silva & Luis Filipe Martins & Helena Lopes, 2015. "Asymmetric labour market reforms and wage growth with fixed-term contracts: does learning about match quality matter?," Working Papers Series 2 15-04, ISCTE-IUL, Business Research Unit (BRU-IUL).
    15. Renato Faccini, 2014. "Reassessing Labour Market Reforms: Temporary Contracts as a Screening Device," Economic Journal, Royal Economic Society, vol. 124(575), pages 167-200, March.
    16. Ignacio García Pérez, J. & Osuna, Victoria, 2014. "Dual labour markets and the tenure distribution: Reducing severance pay or introducing a single contract," Labour Economics, Elsevier, vol. 29(C), pages 1-13.
    17. Yang, Guanyi, 2017. "General Equilibrium Evaluation of Temporary Employment," MPRA Paper 80047, University Library of Munich, Germany.
    18. Ana Rute Cardoso & Daniel S. Hamermesh & José Varejao, 2012. "The Timing of Labor Demand," Annals of Economics and Statistics, GENES, issue 105-106, pages 15-34.
    19. YOKOYAMA Izumi & HIGA Kazuhito & KAWAGUCHI Daiji, 2015. "The Effect of Exchange Rate Fluctuations on Employment in a Segmented Labor Market," Discussion papers 15139, Research Institute of Economy, Trade and Industry (RIETI).
    20. Guiso, Luigi & Pistaferri, Luigi & Schivardi, Fabiano, 2006. "Labour Adjustment: Disentangling Firing and Mobility Costs," CEPR Discussion Papers 5787, C.E.P.R. Discussion Papers.
    21. Paulo Guimarães & Pedro Portugal & Anabela Carneiro, 2010. "On the cyclical sensitivity of real wages," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.

    More about this item

    Keywords

    Labour markets; Productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • J32 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Nonwage Labor Costs and Benefits; Retirement Plans; Private Pensions

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bca:bocawp:10-27. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/bocgvca.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (email available below). General contact details of provider: https://edirc.repec.org/data/bocgvca.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.