Abstract

Abstract This study develops a search and matching model for labour markets with temporary and permanent contracts. It matches empirical patterns of higher matching rates and lower surplus for temporary workers and predicts an increase in separation taxes leads to a fall in the number of new permanent jobs, an increase in their wages, and stable separation rates because temporary workers shield permanent workers from adverse shocks. We find empirical support using a regional French policy experiment, the “Contrat de Transition Professionelle”, which increased separation taxes for recently hired permanent workers in firms with fewer than 1,000 workers.

Talk to us

Join us for a 30 min session where you can share your feedback and ask us any queries you have

Schedule a call

Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.