Abstract

http://ssrn.com/abstract=262668
 
 

References (16)



 
 

Citations (46)



 


 



The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France


Olivier J. Blanchard


International Monetary Fund (IMF); National Bureau of Economic Research (NBER)

Augustin Landier


Toulouse School of Economics

March 2001

MIT Dept. of Economics Working Paper No. 01-14

Abstract:     
Rather than decrease firing costs across the board, a number of European countries have allowed firms to hire workers on fixed-duration contracts. At the end of a given duration, these contracts can be terminated at little or no cost. If workers are kept on however, the contracts become subject to regular firing costs.

We argue in this paper that the effects of such a partial reform of employment protection may be perverse. The main effect may be high turnover in fixed-duration jobs, leading in turn to higher, not lower, unemployment, And, even if unemployment comes down, workers may actually be worse off, going through many spells of unemployment and fixed duration jobs, before obtaining a regular job. Looking at French data for young workers since the early 1980s, we conclude that the reforms have substantially increased turnover, without a substantial reduction in unemployment duration. If anything, their effect on the welfare of young workers appears to have been negative.

Number of Pages in PDF File: 57

Keywords: Labor Market Reform, Temporary Employment, Unemployment, Turnover, Employment Protection

JEL Classification: J60, J63, J64, J68

working papers series





Download This Paper

Date posted: March 8, 2001  

Suggested Citation

Blanchard, Olivier J. and Landier, Augustin, The Perverse Effects of Partial Labor Market Reform: Fixed Duration Contracts in France (March 2001). MIT Dept. of Economics Working Paper No. 01-14. Available at SSRN: http://ssrn.com/abstract=262668 or http://dx.doi.org/10.2139/ssrn.262668

Contact Information

Olivier J. Blanchard (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
202 623 7825 (Phone)
202 623 7271 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Augustin Landier
Toulouse School of Economics ( email )
Place Anatole-France
Toulouse Cedex, F-31042
France
Feedback to SSRN


Paper statistics
Abstract Views: 4,418
Downloads: 531
Download Rank: 27,023
References:  16
Citations:  46

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.312 seconds