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The perverse effects of partial employment protection reform: the case of French older workers

  • Luc Behaghel

    ()

    (Laboratoire d'Economie Appliquée, INRA)

  • Bruno Crépon

    (Institut National de la Statistique et des Etudes Economiques)

  • Béatrice Sédillot

    (Direction de l'Animation de la Recherche des Etudes et des Statistique, Ministère du Travail et des Affaires Sociales)

French firms laying off workers aged 50 and above have to pay a tax to the unemployment insurance system, known as the Delalande tax. We evaluate the impact of this tax 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 under 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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Paper provided by Institut National de la Recherche Agronomique, France in its series Working Papers with number 23397.

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Length: 696-721
Date of creation: 2008
Date of revision:
Publication status: Published in Journal of Public Economics
Handle: RePEc:inr:wpaper:23397
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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. Lazear, Edward P, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, MIT Press, vol. 105(3), pages 699-726, August.
  3. Fabiano Schivardi & Roberto Torrini, 2004. "Firm size distribution and employment protection legislation in Italy," Temi di discussione (Economic working papers) 504, Bank of Italy, Economic Research and International Relations Area.
  4. Adriana D. Kugler, 2004. "The Effect of Job Security Regulations on Labor Market Flexibility. Evidence from the Colombian Labor Market Reform," NBER Chapters, in: Law and Employment: Lessons from Latin America and the Caribbean, pages 183-228 National Bureau of Economic Research, Inc.
  5. Daron Acemoglu & Joshua D. Angrist, 2001. "Consequences of Employment Protection? The Case of the Americans with Disabilities Act," Journal of Political Economy, University of Chicago Press, vol. 109(5), pages 915-957, October.
  6. Cahuc, Pierre & Postel-Vinay, Fabien, 2002. "Temporary jobs, employment protection and labor market performance," Labour Economics, Elsevier, vol. 9(1), pages 63-91, February.
  7. Hernanz, Virginia & Jimeno, Juan F & Kugler, Adriana D., 2003. "Employment Consequences of Restrictive Permanent Contracts: Evidence from Spanish Labour Market Reforms," CEPR Discussion Papers 3724, C.E.P.R. Discussion Papers.
  8. 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.
  9. 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.
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