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

55 Pages Posted: 4 Apr 2012

See all articles by Pierre Cahuc

Pierre Cahuc

Ecole Polytechnique, Paris

Olivier Charlot

University of Cergy-Pontoise

Franck Malherbet

affiliation not provided to SSRN

Date Written: March 2012

Abstract

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.

Keywords: Employment protection legislation, Temporary jobs

JEL Classification: J63, J64, J68

Suggested Citation

Cahuc, Pierre and Charlot, Olivier and Malherbet, Franck, Explaining the Spread of Temporary Jobs and its Impact on Labor Turnover (March 2012). CEPR Discussion Paper No. DP8864, Available at SSRN: https://ssrn.com/abstract=2034085

Pierre Cahuc (Contact Author)

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Olivier Charlot

University of Cergy-Pontoise ( email )

33 Boulevard du Port
Cergy-Pontoise Cedex, Cedex 95011
France

Franck Malherbet

affiliation not provided to SSRN ( email )

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