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The Effect of Trial Periods in Employment on Firm Hiring Behaviour

Author

Listed:
  • Nathan Chappell

    () (Motu Economic and Public Policy Research)

  • Isabelle Sin

    () (Motu Economic and Public Policy Research)

Abstract

An amendment to legislation in 2009 enabled New Zealand firms with fewer than 20 employees to hire new workers on trial periods. The scheme was subsequently extended to employers of all sizes. The policy was intended to encourage firms to take on more employees, and particularly more disadvantaged job seekers, by reducing the risk associated with hiring an unknown worker. We use unit record linked employer-employee data and the staggered introduction of the policy for firms of different sizes to assess the policy effect on firm hiring behaviour. We find no evidence that the policy affected the number of hires by firms on average, either overall or into employment that lasted beyond the trial period. We also do not find an effect on hiring of disadvantaged jobseekers. However, our results suggest that the policy increased hiring in industries with high use of trial periods by 10.3 percent.

Suggested Citation

  • Nathan Chappell & Isabelle Sin, 2016. "The Effect of Trial Periods in Employment on Firm Hiring Behaviour," Working Papers 16_10, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:16_10
    as

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    File URL: http://motu-www.motu.org.nz/wpapers/16_10.pdf
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    References listed on IDEAS

    as
    1. Thomas K. Bauer & Stefan Bender & Holger Bonin, 2007. "Dismissal Protection and Worker Flows in Small Establishments," Economica, London School of Economics and Political Science, vol. 74(296), pages 804-821, November.
    2. Maré, David C & Fabling, Richard, 2013. "The incidence and persistence of cyclical job loss in New Zealand," Working Papers 13_08, Motu Economic and Public Policy Research.
    3. Richard Fabling, 2011. "Keeping it Together: Tracking Firms on New Zealand’s Longitudinal Business Database," Working Papers 11_01, Motu Economic and Public Policy Research.
    4. David H. Autor, 2003. "Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing," Journal of Labor Economics, University of Chicago Press, vol. 21(1), pages 1-42, January.
    5. David H. Autor & William R. Kerr & Adriana D. Kugler, 2007. "Does Employment Protection Reduce Productivity? Evidence From US States," Economic Journal, Royal Economic Society, vol. 117(521), pages 189-217, June.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    90-day trials; employment; labour market flexibility; firm hiring;

    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • J63 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Turnover; Vacancies; Layoffs
    • J64 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Unemployment: Models, Duration, Incidence, and Job Search

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