Research and publications

Fragmented Stability: Recalls and Fixed-Term Contracts in the French Labour Market

joint work with Olivier Charlot and Eloise Menestrier

Abstract: This study investigates in a European perspective the phenomenon of recalls, in which previously laid off or furloughed employees are rehired by the same employer. It specifically examines the French labour market, notable for its pronounced degree of contractual dualism. A novel theoretical model is proposed, illustrating that recalls linked to fixed-term contracts contribute to employment fragmentation. Then, drawing on extensive linked employer-employee data from France spanning 2012 to 2019, we offer fresh empirical insights into recall practices. Our findings reveal a substantial recall rate of 44\%, primarily involving fixed-term contracts of short duration, highlighting the strong link between recalls and contractual dualism. Contrary to expectations, recalls are prevalent even in sectors with stringent fixed-term contract regulations, suggesting potential lapses in enforcement. Our results suggest that a significant proportion of recalls could breach the legal requirements governing the use of fixed-term contracts. At a more granular level, over a quarter of recalled workers are rehired more than five times a year, with women and older employees disproportionately affected—further intensifying labour market segmentation. Firm-level analysis reveals a positive correlation between recalls and both firm size and productivity, while primarily attributing recall practices to fixed firm characteristics. This is observed both in the share of entries into recalled employment and in the duration of contracts upon recall. Recalls may meet firms' structural needs, however, insufficient incentives to stabilise employment and weak regulatory enforcement contribute to increased employment fragmentation and labour market segmentation. In sum, the joint use of recalls and fixed-term contracts leads to a particular labour market dynamics that we term as fragmented stability.

| Current Version | Working paper: IZA, Chaire SPP |

| Policy note: Institut des politiques publiques |

| Media Coverage: Le Monde,  Alternatives Economiques, l'Humanité, Challenges |

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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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Spillover Effects of Employment Protection 

with Pierre Cahuc, Pauline Carry and Pedro S. Martins

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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The Widespread Presence and Effects of Temporay Jobs  

with Pedro S. Martins (forthcoming in Handbook of Labor Market in Transition)

Abstract: Temporary contracts are a key dimension of many (but not all) labour markets. In this chapter, we provide a brief overview of the large theoretical and empirical literature about these types of contracts. First, we argue that temporary contracts are driven by labour demand, institutional, and bargaining factors. Second, we present findings across worker, firm, and institutional outcome dimensions. In some of these areas, the literature does not yet provide consistent findings. We also make several suggestions for further research, including evaluating the impact of temporary contracts designs, unemployment insurance experience rating schemes, and labour market power. More detailed data sources may be required in some cases.

| Current version | Working paper: n/a |

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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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