Temporary Jobs, Employment Protection and Labor Market Performance

By Pierre Cahuc, F. Postel-Vinay. Social Science Research Network, 2002

524 citations recorded by the source corpus.

Many European labor markets are characterized by heavy employment protection taxes and the widespread use of fixed-duration contracts. The simultaneous use of these two policy instruments seems somewhat contradictory since the former primarily aims at limiting job destruction whereas the latter clearly intensifies it. In this paper, we use a simple matching model with endogenous job destructions to analyze the impact of a combination of the two policies. We find that the political support of insiders to firing restrictions does not necessarily worsen unemployment. In fact, it may be the willingness of a majority of workers to support the combination of two instruments with opposite effects on job destruction and job creation that increase unemployment and deteriorates efficiency. Moreover, we argue, that the concentration of firm ownership is likely to influence labor market regulations. We show that the preferred point of a majority of workers is a very flexible labor market, without any firing cost when profits are evenly distributed across the labor force (which portrays a situation where firm ownership is extremely dispersed), whereas a combination of job protection and temporary jobs is preferred by workers when the share of profits that they earn is zero (which corresponds to a situation where firm ownership is concentrated among a few shareholders not participating in the labor market).

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/91217984127b74de026bdb05f0af1927f5fedda9

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Citations in the corpus

Reforming an insider-outsider labor market: the Spanish experience (2012, background): “11This generalization is inspired by Blanchard and Landier (2002) and Cahuc and Postel-Vinay (2002), which are the first papers to allow for dual contracts in search and matching models.”
Temporary Contracts and Employee Effort (2003, unknown): “The SLFS - a rotating panel dataset - 1 See e.g. OECD 1999, Cahuc and Postel-Vinay 2002, Dolado et al. 2002, Holmlund and Storrie 2002, and Blanchard and Landier 2002.”
Labour Market Flexibilization and its Consequences in Italy (2009, background): “Consequently, they would in any case be reluctant to move workers to a permanent position, whatever their human capital, thus leaving the worker rolling into carousel of unemployment and temporary contracts4 (Blanchard and Landier, 2002; Cahuc and Postel-Vinay, 2002).”
Institutions and the prevalence of nonstandard employment (2015, background): “In response, policy makers in many countries have loosened restrictions on hiring temporary workers but retained the protections for permanent employees (Cahuc and Postel-Vinay, 2002; Giesecke and Groß, 2003; DiPrete et al. 2006; Barbieri, 2009).”
Two-tier Employment Protection Reforms: The Spanish Experience (2008, background): “unemployment ( Cahuc and Postel-Vinay, 2002, and Blanchard and Landier, 2002).”
LABOR CONTRACTS AND FLEXIBILITY: EVIDENCE FROM A LABOR MARKET REFORM IN SPAIN (2014, unknown): “1 Our model builds on and extends papers on dynamic structural models of labor demand with nonconvex adjustment costs, such as Rota (2004), and Cooper and Willis (2004). The most relevant extensions are the following: (a) we consider two types of labor contracts, temporary and permanent; (b) our spe”
Two Tier Reforms of Employment Protection: a Honeymoon Effect?* (2007, unknown): “In particular, Garibaldi and Mauro (2002) found that the employment intensity of growth in Europe increased from the second half of the nineties, but to date no satisfactory explanation has been offered for this marked change. In this paper we provide an explanation for growthless job creation, whic”
Job Security and Job Protection (2005, unknown): “With these probabilities in hand, we construct a predictor of φi by simply taking the expectation of φk using the individual-specific class weights defined in (8):”
LABOR TURNOVER COSTS AND THE CYCLICAL BEHAVIOR OF VACANCIES AND UNEMPLOYMENT (2009, background): “� −c + q(�)(J e − V ) + �(EpV ′ − V ) ≡ � if � > 0 max{0,�} if � = 0, ( 5 )”
Labor regulations and contract labor use: Evidence from Indian firms (2015, result): “The results of this paper are also broadly related to theoretical work on employment protection and temporary workers in the European context [Blanchard and Landier (2002), Cahuc and Postel-Vinay (2002)].”
The Determinants of Unemployment across OECD Countries (2007, background): “…the turnover in this segment of the labour market – potentially implying disincentives to train the concerned workers – without constituting a stepping stone to more permanent work relationships, as long as these remain costly to dissolve (Blanchard and Landier, 2002; Cahuc and Postel-Vinay, 2002).”
Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover (2016, unknown): “From equations (12) and (13), the free entry condition can be written as”