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Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover

  • Cahuc, Pierre

    ()

    (Ecole Polytechnique, Paris)

  • Charlot, Olivier

    ()

    (University of Cergy-Pontoise)

  • Malherbet, Franck

    ()

    (University of Rouen)

This paper provides a simple model which explains the choice between permanent and temporary jobs. This model, which incorporates important features of actual employment protection legislations neglected by the economic literature so far, reproduces the main stylized facts about entries into permanent and temporary jobs observed in Continental European countries. We show that the stringency of legal constraints on the termination of permanent jobs has a strong positive impact on the turnover of temporary jobs. We also find that job protection has very small effects on total employment but induces large substitution of temporary jobs for permanent jobs which significantly reduces aggregate production.

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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 6365.

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Length: 55 pages
Date of creation: Feb 2012
Date of revision:
Publication status: Forthcoming in: International Economic Review
Handle: RePEc:iza:izadps:dp6365
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  7. Robert Shimer, 2005. "The Cyclical Behavior of Equilibrium Unemployment and Vacancies," American Economic Review, American Economic Association, vol. 95(1), pages 25-49, March.
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  9. Ch. Pissarides., 2011. "The Unemployment Volatility Puzzle: Is Wage Stickiness the Answer?," VOPROSY ECONOMIKI, N.P. Redaktsiya zhurnala "Voprosy Economiki", vol. 1.
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  13. Bassanini, Andrea & Garnero, Andrea, 2012. "Dismissal Protection and Worker Flows in OECD Countries: Evidence from Cross-Country/Cross-Industry Data," IZA Discussion Papers 6535, Institute for the Study of Labor (IZA).
  14. Cahuc, Pierre & Charlot, Olivier & Malherbet, Franck, 2012. "Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover," IZA Discussion Papers 6365, Institute for the Study of Labor (IZA).
  15. L'Haridon, Olivier & Malherbet, Franck, 2006. "Employment Protection Reform in Search Economies," IZA Discussion Papers 2304, Institute for the Study of Labor (IZA).
  16. Andrea Caggese & Vicente Cuñat, 2008. "Financing Constraints and Fixed-term Employment Contracts," Economic Journal, Royal Economic Society, vol. 118(533), pages 2013-2046, November.
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  28. Dräger, Vanessa & Marx, Paul, 2012. "Do Firms Demand Temporary Workers When They Face Workload Fluctuation? Cross-Country Firm-Level Evidence on the Conditioning Effect of Employment Protection," IZA Discussion Papers 6894, Institute for the Study of Labor (IZA).
  29. Lorenzo Cappellari & Carlo Dell'Aringa & Marco Leonardi, 2011. "Temporary Employment, Job Flows and Productivity: A Tale of two Reforms," CESifo Working Paper Series 3520, CESifo Group Munich.
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