Employment protection and temporary work agencies

Florian Baumann, Mario Mechtel () and Nikolai Stähler ()

No 2008,26, Discussion Paper Series 1: Economic Studies from Deutsche Bundesbank, Research Centre

Abstract: Employers who use temporary agency staff in contrast to regular staff are not affected by employment protection regulations when terminating a job. Therefore, services provided by temporary work agencies may be seen as a substitute for regular employment. In this paper, we analyze the effects of employment protection on the size of the temporary work agency sector in a model of equilibrium unemployment. We find that higher firing costs may even reduce temporary work agency employment if agencies themselves are subject to employment protection, a consideration which distinguishes our results from those for fixed-term employment arrangements.

Keywords: employment protection; temporary work agencies; search and matching models; unemployment (search for similar items in EconPapers)
JEL-codes: J68 J65 J64 J30 (search for similar items in EconPapers)
Date: 2008
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Persistent link: http://EconPapers.repec.org/RePEc:zbw:bubdp1:7565

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