JVM Seminar: Franck Malherbet (CREST Paris)
Taxation of Temporary Jobs: Good Intentions With Bad Outcomes?
Abstract: This paper analyzes the consequences of the taxation of temporary jobs of short duration 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.