Taxation of Temporary Jobs: Good Intentions with Bad Outcomes?

52 Pages Posted: 14 Nov 2016

See all articles by Helène Benghalem

Helène Benghalem

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

Pierre Cahuc

Ecole Polytechnique, Paris

Franck Malherbet

ENSAE; Universite Paris I Pantheon-Sorbonne

Olivier Charlot

University of Cergy-Pontoise

Emeline Limon

University of Cergy-Pontoise

Date Written: November 2016

Abstract

This paper analyzes the consequences of the taxation of temporary jobs recently introduced in several European countries to induce firms to create more open-ended contracts and to increase the duration of jobs. The estimation of a job search and matching model on French data shows that the taxation of temporary jobs does not reach its objectives: it reduces the mean duration of jobs and decreases job creation, employment and welfare of unemployed workers. We find that a reform introducing an open-ended contract without layoff costs for separations occurring at short tenure would have opposite effects.

Keywords: Employment protection legislation, taxation, Temporary jobs

JEL Classification: J63, J64, J68

Suggested Citation

Benghalem, Helène and Cahuc, Pierre and Malherbet, Franck and Charlot, Olivier and Limon, Emeline, Taxation of Temporary Jobs: Good Intentions with Bad Outcomes? (November 2016). CEPR Discussion Paper No. DP11628, Available at SSRN: https://ssrn.com/abstract=2869083

Helène Benghalem (Contact Author)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Pierre Cahuc

Ecole Polytechnique, Paris ( email )

1 rue Descartes
Paris, 75005
France

Franck Malherbet

ENSAE ( email )

92245 Malakoff Cedex
France

Universite Paris I Pantheon-Sorbonne

15 Boulevard Gabriel Peri
92245 Malakoff Cedex
France
+33 1 4117 3550 (Phone)
+33 1 4117 7634 (Fax)

Olivier Charlot

University of Cergy-Pontoise ( email )

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

Emeline Limon

University of Cergy-Pontoise

33 Boulevard du Port
Cergy-Pontoise Cedex, 95011
France

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