Taxation of Temporary Jobs: Good Intentions with Bad Outcomes?

Abstract

This article analyses 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.

Assessing recent reforms and policy directions in France

“…Recent evidence suggests that the introduction of a maximum schedule may have a positive impact on the performance of small businesses, but not on other firms (Cahuc, Carcillo and Patault, 2018 [39]). This suggests that high firing costs or legal uncertainty may be a particularly important issue for small firms.…”

“…Appeal courts confirmed the level of compensation in 53%, raised it in 36%, and decreased it in 12% of the first instance cases during 2006-2016. Between 60-67% of the decisions in first instance were appealed during 2004-2013 (Cahuc, Carcillo and Patault, 2018 [39]).…”

“…Legal uncertainty could be reduced further through an enhanced professionalisation of first-instance labour courts and conciliation efforts. With almost two in three decisions in first instance labour courts appealed in 2017 and only half of the rulings upheld in the appeal court, there seems to be space to improve the quality of first instance labour courts (Cahuc, Carcillo and Patault, 2018 [39]). France is together with Mexico the only country to rely solely on non-professional judges in first instance labour courts.…”

Améliorer les performances du marché du travail en France: mise en oeuvre de la Stratégie pour l’emploi de l’OCDE

“…La contribution des CDD d'usage, peu réglementés et qui constituent l'essentiel de la hausse récente des CDD courts (Encadré 7), n'avait augmenté que de 0.5 point de pourcentage, tandis que l'intérim et les contrats saisonniers avaient été exclus. Les évaluations disponibles montrent un impact limité ou même contreproductif de ces mesures partielles de modulation des cotisations sur la rotation de la main d'oeuvre (Berson et Ferrari, 2017 ;Cahuc et al, 2016), ce qui peut refléter le manque de ciblage et la faiblesse des modulations de cotisation de ce dispostif (Coquet et Heyer, 2019).…”

Republic of Slovenia: Selected Issues

“…Source: EUROSTAT Source: EUROSTAT Source: EUROSTAT 8 There could be further unintended consequences of the reform which however cannot be captured by our data. For instance , Cahuc et. al.…”