L’effet des coûts de licenciement sur la durée des emplois des travailleurs peu qualifiés en France

Pierre Cahuc, Franck Malherbet and Julien Trapp

Revue française d'économie, 2019, vol. XXXIV, issue 1, 15-43

Abstract: Until September 2017, companies with more than 11 employees were required to pay at least six months? wages to employees with more than two years of seniority in the event of dismissal without real and serious cause. Based on data from the Ministry of Justice, we find that this regulation leads to an increase in severance pay at two years of seniority, resulting in a significant increase in the rate of job destruction before the threshold of two years and a drop just after. The costs of redundancy and their procedural component are assessed by estimating a search-and-matching model that replicates changes in the rate of job destruction. We find that the total cost of redundancies increases with seniority and is about four times higher than the legal and conventional two-year seniority allowances. Counterfactual exercises show that, due to the fragility of low-seniority jobs, redundancy costs reduce average employment duration for a wide range of empirically relevant parameters.

Date: 2019
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