DP11628 Taxation of Temporary Jobs: Good Intentions With Bad Outcomes ?
|Author(s):||Hélène Benghalem, Pierre Cahuc, Olivier Charlot, Emeline Limon, Franck Malherbet|
|Publication Date:||November 2016|
|Keyword(s):||Employment protection legislation, taxation, Temporary jobs|
|JEL(s):||J63, J64, J68|
|Programme Areas:||Labour Economics|
|Link to this Page:||www.cepr.org/active/publications/discussion_papers/dp.php?dpno=11628|
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.