- 1815-1973 (en ligne)
The views expressed in these papers are those of the author(s) and do not necessarily reflect those of the OECD or of the governments of its member countries.
Moving Towards a Single Labour Contract
Pros, Cons and Mixed Feelings
- Nicolas Lepage-Saucier1, Juliette Schleich1, Etienne Wasmer1
- Author Affiliations
- 1: Sciences Po, Paris, France
- 21 fév 2013
- Bibliographic information
We then build a simple model where both temporary and permanent contracts are available to firms. We use it to describe the demand for temporary contracts and the potential consequences of removing them and reach the following conclusions. First, employment protection has a moderate negative impact on employment, which can be mitigated when temporary contracts are available. Second, the elimination of temporary contracts decreases total employment (by 7 percentage points according to our calculations). Offsetting this effect would require an ambitious reform of employment protection laws of permanent contracts (in this specific setup, amounting to a cut in layoff costs by two thirds). Finally, the coexistence of temporary and permanent contracts may also have negative effects on social norms within the firm and workers' motivation and eliminating temporary contracts could therefore enhance productivity in this context.
We conclude that while there are costs to dualism, these are not as obvious and well established as the ones triggered by employment protection itself. Further, the single employment contract may partly be a qui pro quo (misunderstanding) Instead, more clarity on the objectives of a labour reform is needed.
- labour market reform, unemployment, dualism, single labour contract, employment contracts
- Classification JEL:
- J41: Labor and Demographic Economics / Particular Labor Markets / Labor Contracts
- J42: Labor and Demographic Economics / Particular Labor Markets / Monopsony; Segmented Labor Markets
- J80: Labor and Demographic Economics / Labor Standards: National and International / General