Discussion Paper Details

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Title: Taxation of Temporary Jobs: Good Intentions With Bad Outcomes ?

Author(s): Hélène Benghalem, Pierre Cahuc, Olivier Charlot, Emeline Limon and Franck Malherbet

Publication Date: November 2016

Keyword(s): Employment protection legislation, taxation and Temporary jobs

Programme Area(s): Labour Economics

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.

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Bibliographic Reference

Benghalem, H, Cahuc, P, Charlot, O, Limon, E and Malherbet, F. 2016. 'Taxation of Temporary Jobs: Good Intentions With Bad Outcomes ?'. London, Centre for Economic Policy Research.