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: | 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.