Research and publications

The Detrimental Effect of Job Protection on Employment: Evidence from France

with Pierre Cahuc and Julien Prat (Reject and Resubmit to the Journal of Political Economy)

Abstract: According to French law, employers have to pay at least six months salary to employees whose seniority exceeds two years in case of unfair dismissal. We show, relying on data, that this regulation entails a hike in severance payments at two-year seniority which induces a significant rise in the job separation rate before the two-year threshold and a drop just after. The layoff costs and its procedural component are evaluated thanks to the estimation of a search and matching model which reproduces the shape of the job separation rate. We find that total layoff costs increase with seniority and are about four times higher than the expected severance payments at two years of seniority. Counterfactual exercises show that the fragility of low-seniority jobs implies that layoff costs reduce the average job duration and increase unemployment for a wide set of empirically relevant parameters. 

| Current version | Working paper: CEPR, IZA |

| Media Coverage: Vox-EU |

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Title Employment Effect of Restricting Fixed-Term Contracts: Theory and Evidence 

with Pierre Cahuc, Pauline Carry and Pedro S. Martins (submitted)

Abstract: This paper examines a labor law reform implemented in Portugal in 2009 which restricted the use of fixed-term contracts to reduce labor market segmentation.  The reform targeted establishments created  by  large  firms  above  a  specific  size  threshold,  covering  about  15%  of  total  employment. Drawing on linked employer-employee longitudinal data and regression discontinuity methods, we find  that,  while  the  reform  was  successful  in  reducing  the  number  of  fixed-term  jobs,  it  did  not increase the number of permanent contracts and decreased employment in large firms.  However, we  find  evidence  of  positive  spillovers  to  small  firms  that  may  bias  reduced  form  estimates. To evaluate general equilibrium effects, we build and estimate a directed search and matching model with endogenous number of establishments and jobs.  We find spillover effects that induce small biases on reduced form estimates but that significantly change the evaluation of the overall impact of  the  reform  because  they  diffuse  to  the  whole  economy. We  estimate  that  the  reform  slightly reduced aggregate employment and had negative effects on the welfare of employees and unemployed workers.

| Current version | Working paper: CEPR, IZA |

| Media Coverage: Vox-EU Atlantico |

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Minimum Wage Spillovers in an Equilibrium Search and Matching Model

joint work with Olivier l'Haridon and Denys Médée-Welter

Abstract:  TBA

| In preparation |

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Job Mobility and Creative Destruction: Flexicurity in the Land of Schumpeter

joint work with Francis Kramarz, Hèlène Turon and Josef Zweimüller

Abstract:  TBA

| In preparation |

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Temporay Layoffs in a Dual Labor Market

joint work with Olivier Charlot and Eloise Menestrier

Abstract:  TBA

| In preparation |