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Employment protection and temporary work agencies

  • Baumann, Florian
  • Mechtel, Mario
  • Stähler, Nikolai

Employers who use temporary agency staff in contrast to regular staff are not affected by employment protection regulations when terminating a job. Therefore, services provided by temporary work agencies may be seen as a substitute for regular employment. In this paper, we analyze the effects of employment protection on the size of the temporary work agency sector in a model of equilibrium unemployment. We find that higher firing costs may even reduce temporary work agency employment if agencies themselves are subject to employment protection, a consideration which distinguishes our results from those for fixed-term employment arrangements.

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Paper provided by Deutsche Bundesbank, Research Centre in its series Discussion Paper Series 1: Economic Studies with number 2008,26.

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Date of creation: 2008
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Handle: RePEc:zbw:bubdp1:7565
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  1. Cahuc, Pierre & Postel-Vinay, Fabien, 2001. "Temporary Jobs, Employment Protection and Labor Market Performance," IZA Discussion Papers 260, Institute for the Study of Labor (IZA).
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  3. Pietro Garibaldi & Giovanni L. Violante, 2005. "The Employment Effects of Severance Payments with Wage Rigidities," Economic Journal, Royal Economic Society, vol. 115(506), pages 799-832, October.
  4. Dale T. Mortensen & Christopher A. Pissarides, 1993. "Job Creation and Job Destruction in the Theory of Unemployment," CEP Discussion Papers dp0110, Centre for Economic Performance, LSE.
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  6. Jahn, Elke J., 2008. "Reassessing the Wage Penalty for Temps in Germany," IZA Discussion Papers 3663, Institute for the Study of Labor (IZA).
  7. Michael Neugart & Donald Storrie, 2006. "The emergence of temporary work agencies," Oxford Economic Papers, Oxford University Press, vol. 58(1), pages 137-156, January.
  8. Luca Nunziata & Stefano Staffolani, 2007. "Short-Term Contracts Regulations And Dynamic Labour Demand: Theory And Evidence," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(1), pages 72-104, 02.
  9. Wasmer, Etienne, 1999. "Competition for Jobs in a Growing Economy and the Emergence of Dualism," Economic Journal, Royal Economic Society, vol. 109(457), pages 349-71, July.
  10. Edward P. Lazear, 1990. "Job Security Provisions and Employment," The Quarterly Journal of Economics, Oxford University Press, vol. 105(3), pages 699-726.
  11. Miles, Thomas J, 2000. "Common Law Exceptions to Employment at Will and U.S. Labor Markets," Journal of Law, Economics and Organization, Oxford University Press, vol. 16(1), pages 74-101, April.
  12. Michael Kvasnicka, 2009. "Does Temporary Help Work Provide a Stepping Stone to Regular Employment?," NBER Chapters, in: Studies of Labor Market Intermediation, pages 335-372 National Bureau of Economic Research, Inc.
  13. Mortensen, Dale T. & Pissarides, Christopher A., 1999. "New developments in models of search in the labor market," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 39, pages 2567-2627 Elsevier.
  14. Kvasnicka, Michael, 2003. "Inside The Black Box of Temporary Help Agencies," SFB 373 Discussion Papers 2003,43, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
  15. O Blanchard & A Landier, 2002. "The Perverse Effects of Partial Labour Market Reform: fixed--Term Contracts in France," Economic Journal, Royal Economic Society, vol. 112(480), pages F214-F244, June.
  16. Booth, Alison L. & Francesconi, Marco & Frank, Jeff, 2002. "Labour as a buffer: do temporary workers suffer?," ISER Working Paper Series 2002-29, Institute for Social and Economic Research.
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